is taking more time than earlier envisaged.
The deal, announced a year ago, was to achieve closure by 2017 end. However regulators in key markets such as EU, US, Brazil and India are yet to approve the $66 billion merger.
Industry sources say both companies
are likely to meet at an appropriate time to extend the closure date beyond the end of the current year. According to the terms of the deal announced in September last year, Bayer
pledged to pay Monsanto
$2 billion if regulators blocked the deal. However, sources say both companies
are optimistic about the approvals coming through, though they may be delayed slightly and hence the two firms will agree on extending the time for the merger
Because of the two companies’ far-flung operations and markets, the deal would require approval from about 30 regulatory agencies across the globe, including anti-trust enforcers. Another reason for both companies
to agree on the extension is that last week Dow DuPont
announced the successful completion of the merger
between Dow Chemical Company
and E.I. du Pont de Nemours Company
(“DuPont”), effective August 31, 2017. Chemical giants Dow Chemical (DOW) and DuPont (DD) had announced the merger
intention in 2015.
While the Monsanto
spokesperson could not be reached, Bayer
declined to comment.
There are other reasons for extending the deadline. The European Union’s anti-trust authorities have launched an in-depth probe into German chemical giant Bayer’s $66 billion purchase of Monsanto
as the mega-merger
will reshape the global agri-business industry, creating the world’s largest supplier of seeds and crop chemicals. European anti-trust authorities raised concerns that the deal would “reduce competition in a number of different markets, resulting in higher prices, lower quality, less choice and less innovation”, when they announced the probe a a fortnight ago.
In India, the Competition Commission is still studying the proposal, according to sources.
India, as a part of its normal business strategies, announced the sale of its seeds business. In this connection, a Monsanto
India spokesperson said, “Over the last year, we have implemented a series of global actions in our businesses to help proactively manage current market challenges while strategically positioning our businesses for future growth. We plan to enhance focus on our existing businesses in corn, crop protection, vegetables, biologicals, Bollgard II technology solutions and digital agriculture. We have signed an agreement with Tierra Agrotech Private Limited
to pursue the sale of the branded cotton seed
business, which will be effective subsequent to necessary approvals.”
Industry official said Monsanto
has been for long talking about exiting the cotton seeds business. However none could put a number to the deal size. The Monsanto
India spokesperson said the company felt that, “Tierra Agrotech Private Limited
is interested in strategically investing in the business and continuing to introduce new products, unlocking value for itself and its farmer customers”.