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News Report Says U.S. Antitrust Body Agreed In Principle To Bayer-Monsanto Deal

News Report Says U.S. Antitrust Body Agreed In Principle To Bayer-Monsanto Deal
Following news about the clearance of the acquisition of Monsanto by the German drugs and pesticides group Bayer for a value of $62.5 billion by the U.S. Justice Department saw the share of Bayer jump by almost 5 per cent on Tuesday.
According to a report by the Wall Street Journal late on Monday that quoted people with knowledge of the matter, after Monsanto and Bayer agreed to sell off more of their assets, an agreement in principle was reached by the Justice Department with Bayer and Monsanto recently.
The report said that further concessions in relation to its digital agriculture business was agreed to by Bayer as well as selling off more seed and treatment assets to BASF as per the deal.
The concessions that were agreed to be given away to the U.S. Justice Department were not much more than what the company had already agreed to do with the European Commission, said Baader Helvea analyst Markus Mayer.
“The selling of these assets and the rights issue ... should start therefore soon and should be positive triggers for the stock,” Mayer said. The rights issue would be smaller than the market was initially expecting, he added.
Share values of the largest seed company in the world – Monsanto, were near four years high following the news.
The new company that would be created by the deal between Bayer and Monsanto would create an entity that would have control of one third of the world seed market. The deal is also among the largest three taking place in recent years in the agribusiness sector. While companies in the agribusiness segment have bene forced to consolidate because of growing farm pressures the deals have sparked resistance and outcry from environmental and farming groups who are concerned about the ultimate market [power of the new merged entities.
Wenonah Hauter, executive director for Food & Water Watch, an advocacy group said that for farmers who are already struggling to cope up with risks of price squeezing and low crop yields would not also have to face reduced competition in the offering of seeds and chemicals by the deal.
“The Justice Department’s paltry divestment approach does little to address the extreme control the merged firm will have over farmers’ data, genetics, biotechnology traits or the associated agrichemical industry,” she said.
While not choosing to comment om the newspaper article, Bayer said that it expects the deal to be closed by the second half of the year.
There were no comments made by BASF, Monsanto and the Justice Department.
The U.S. and the other regulatory clearances that would be needed for the deal would get completed by the second quarter, Monsanto had said last week during a quarterly earnings report. The pending matter prevented Monsanto from holding its usual conference call with analysts for discussions on the earnings.

Christopher J. Mitchell

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