EU approves Monsanto-Bayer deal
On March 21, the year-long pending merger between agricultural (XLB) giants Monsanto (MON) and Bayer inched a step closer to closure. The companies received approval from the antitrust watchdogs in the EU (European Union). Following this news release, Monsanto closed about 57 basis points higher at $119, while Bayer rose by 15 basis points to 94.4 euros.
This news signifies that the EU antitrust agencies have satisfied their concerns related to this deal. In a press release from August 22, 2017, the European Commission identified concerns such as the limited choice of pesticides and a high market share for seeds among companies in Europe as well as around the world. According to the European Commission, Monsanto and Bayer are two companies among a handful of players that have the capability to develop new solutions in this field. Bayer offered to divest assets to satisfy antitrust concerns.
This deal would be the third largest merger in the chemicals space following the merger between Dow Chemicals and DuPont (DWDP) and between ChemChina and Syngenta (SYT). The merger was expected to close by early 2018. However, the deal may not meet that timeline given that approvals from Russia and the US are still pending. In the next article, we’ll discuss some of the issues concerning merger approval.