German chemical and pharma major Bayer on Tuesday expressed confidence that it would secure regulator Competition Commission of India's (CCI's) approval by April or May for the $66-acquisition of US-based biotech major Monsanto.
The deal can't be closed globally unless CCI gives its approval as mandated by the Indian Competition Act of 2002.
India is one of the 30 countries whose approval is needed for the merger to go through. As many as 14 countries have approved the merger.
The Competition Act 2002 mandates that CCI's approval is required, along with other agencies, before an entity closes its deal globally or else penal provisions can be imposed on the combined entity. Earlier this month, the CCI launched a public consultation process to determine whether the merger between the global giants, to create the world's largest seeds and pesticide firm, will have an adverse impact on competition in India. The Bayer-Monsanto deal would create the world's largest seeds and pesticide firm.
CCI places a deal for public consultation if it is of the "prima facie opinion that the combination has, or likely to have an appreciable adverse effect on competition".
"We are working with the regulator. We are confident of getting the CCI approval," said Richard van der Merwe, senior Buyer representative, South Asia.
Merwe said CCI has already approved the merger deals of Dow Chemical and Dupont, as well as, Syngenta and Chemchina and he doesn't see any reason why their deal won't get the necessary clearance.
"Regulators need to justify their actions too," Merwe said.
The company has secured one approval in the United States, while one more is pending.
European Union's clearance is also awaited.
Monsanto would add seed business to Bayer's already significant crop science and pharmaceutical business in India.
"We have exited from herbicide business. There are still some overlaps like vegetable seeds but there are 300 seed companies in India and there is no monopoly," he said, adding that CCI nod is expected by April-May 2018.
While refusing to give details of the size of the merged entity, he said Bayer India had an annual revenue of 600 million euros (about Rs 47 billion or Rs 4,700 crore) in 2017.
"Genetically modified (GM) technology could and should play a significant role in solving the food problem going forward and it has a role to play," Merwe said.
Asked about government price control and a cap on trait fees, Merwe said: "It bothers us. There is a fine line between regulations and new investment."
On intellectual property rights in India, he said there is no concern.
In India, both entities have a presence in production and sale of vegetable seeds, cotton seeds as well as in production and sale of non-selective herbicides, according to that notice.
Bayer group is present in India since 1896 and it has two divisions — crop science and pharmaceuticals. The group has one listed entity in India — Bayer CropScience that posted a revenue from the operation of nearly Rs 30 billion (Rs 3,000 crore) last financial year.