Bayer, Monsanto likely to extend merger deadline

Regulatory approvals from key markets including India, EU, US, Brazil are pending

 The Bayer–Monsanto mega merger 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 to close. 

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. 

Meanwhile, Monsanto 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”.

Monsanto’s GM cotton seed technology is licensed to 49 companies and that business is under Mahyco Monsanto Biotech (MMB), a 50:50 joint venture between Mahyco and Monsanto Holdings Pvt Ltd.