Sector News

Bayer delays completing Monsanto acquisition until early 2018

September 20, 2017
Chemical Value Chain

Bayer said today that completing its $66-billion deal to acquire Monsanto would be delayed until early next year.

Speaking at Bayer’s Future of Farming Dialog press briefing at Monheim, Germany, Liam Condon, president/crop science division at Bayer, said that on 18 September Bayer filed an application with the European Commission for an extension by 10 working days, which takes the completion date to 22 January 2018. The commission is working closely with other worldwide regulatory authorities, he said.

In a question-and-answer session, Condon said that the companies’ portfolios are complementary, with big positions in crop protection for Bayer and sees and traits for Monsanto. In its agreement with Monsanto, Bayer said it is willing to divest businesses with combined sales—by Bayer and Monsanto—of $1.6 billion/year and that if it were to walk away from the deal, for other than regulatory reasons, it would need to pay a breakup fee of $2 billion. Bayer is in discussions with multiple interested parties to sell businesses, mainly in seeds and traits, and herbicides—where there are particular overlaps—in total or in parts. LibertyLink gluphosinate herbicide and LibertyLink gluphosinate-resistant soybean, cotton, and canola form part of the potential divestment. “We have gluphosinate ammonium and Monsanto has glyphosate and that is serving the same markets. Gluphosinate is much smaller and this is the business that will need to be divested,” Condon tells CW. Production sites are in Germany and the United States, he adds.

Condon said that the regulators would have to approve the ultimate buyers of the business that will be sold. “We could sell to private equity buyers but the authorities would not accept that as they would know that it would be sold on eventually. The regulators want to maintain competition in the market and the buyer or buyers would need to be strong strategic players.”

Condon also hinted that the Monsanto name would be dropped. “The name of the combined company will be communicated on closing of the deal, but I can confirm that we are very fond of the Bayer brand,” he said.

The new company will be the world’s largest agricultural chemicals maker. Its combined proforma 2016 sales were $24.5 billion, comprising Bayer’s crop science business with €9.9 billion ($11 billion) and Monsanto’s $13.5 billion. In 2015, the year with the latest available numbers for the consolidating agchem industry, Bayer-Monsanto’s proforma sales were €23.1 billion; ChemChina-Syngenta had €14.8 billion in agchems sales; and Dow Ag-DuPont generated €14.6 billion in sales. Even after divestments, Bayer-Monsanto will lead by a wide margin.

Bayer says the combined company will offer flexibility to farmers. “Our plan is to work on complete agronomic solutions for farmers. That means that we customize for specific growers, offering the right seeds and biological products, and together with that a service that comes from our digital platform. We can add value to the grower. But farmers can also buy individual products,” said Mathias Kremer, head of crop strategies and portfolio management at Bayer, at the event.

By Natasha Alperowicz

Source: Chemical Week

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