The Department of Justice announced on Tuesday that it will require Bayer AG to sell roughly $9 billion in assets to complete its $66 billion acquisition of Monsanto.
Unless Bayer does so, the agency said, the deal would yield higher-priced and lower-quality seed and crop protection products as well as prevent innovative agricultural technology products from coming to market.
“This comprehensive structural solution to significant horizontal and vertical competition concerns — the largest merger divestiture ever required by the United States — preserves competition in the sale of these critical agricultural products and protects American farmers and consumers,” Makan Delrahim, the assistant attorney general who heads the department’s antitrust division, said in a statement.
The divestitures are in keeping with Delrahim’s preferred strategy of requiring “structural remedies” such as asset sales in deals that pose anticompetitive concerns, rather than so-called behavioral remedies like those favored in President Barack Obama’s administration. Requirements that companies avoid certain behaviors after a merger are often difficult to enforce since they require intense monitoring for which the government lacks resources.
Justice will require Germany-based Bayer to sell any business that directly competes with Monsanto, including its cotton, soybean, and vegetable seed businesses. Bayer would also have to sell its herbicide unit, given St. Louis-based Monsanto’s popular Roundup product, as well as some assets still in development.
In a statement, Bayer Chief Executive Officer Werner Baumann said the Justice Department’s conditional approval of the deal “brings us close to our goal of creating a leading company in agriculture.” The firm expects to receive any remaining regulatory approvals soon.
