Bayer involved in largest divesture as U.S. orders ag business sale

Bayer AG, the globally renowned drug major, has apparently decided to sell its agricultural business & assets estimated at nearly USD 9 billion to BASF SE, a key German player across the chemical sector. The deal has come forth post the demand of U.S. antitrust authorities for the approval of Bayer’s deal with Monsanto.

Reportedly, this is one of biggest divestments recorded in the U.S. antitrust enforcement history. The strategic move is expected to pave the way for the official approval of Bayer’s USD 66 billion acquisition of Monsanto, a U.S. based agrochemical organization, from the U.S. Department of Justice. Earlier, the U.S. antitrust regulators had asked Bayer AG to divest assets such as vegetable oils, canola, seeds business, and soybean to promote fair competition and avoid price rise post Bayer-Monsanto merger.

The U.S. Department of Justice has announced that the pharmaceutical giant has also agreed to some of the structural divestments along with the sale of specific intellectual property & research abilities that also encompass R&D ventures. The U.S. antitrust regulator added that it had signed a deal with Bayer making it legally binding for the firm to sell its assets to restore competition in the pharma business. It has been projected that the settlement is likely to benefit the U.S. farmers & consumers.

Bayer & Monsanto are currently competing against each other to sell vegetable seed and crop protection products. The Justice department had issued the statement that the merger without the asset sale can lead to increase in the costs of agricultural items, low quality, and less alternatives across a wide range of seed & crop-protection items. However, experts claim that the merger will give rise to oligopoly across the agricultural sector with only a few players dominating the farming business.

Earlier in March this year, the EU approved the merger between Bayer AG & Monsanto on the grounds that the former will sell assets worth USD 7.4 billion to BASF to reduce its domination across the seed & pesticide industry.