After months of back-and-forth negotiations between Bayer AG (XTER:BAYN, Financial) (BAYRY, Financial) and regulators, the Wall Street Journal reported on Monday the company made a deal with the U.S. Justice Department for antitrust approval of its $62.5 billion takeover of Monsanto Co. (MON, Financial).
The German drugs and pesticides company agreed to sell additional assets in exchange for approval, which has been a long time coming. Bayer first approached the world’s largest seeds company with a buyout offer in 2016, increasing the price multiple times before Monsanto finally accepted. According to CNBC, the combined company will control more than a quarter of the world’s seeds and pesticides market.
Antitrust regulators in Europe approved the deal in March after the companies agreed to sell $7 billion worth of assets to BASF SE (XTER:BAS, Financial). China, Brazil and Australia have also approved the proposed merger.
To address concerns regarding American farmers, Bayer promised U.S. regulators it will sell additional seed and treatment assets to BASF and has agreed to make further concessions related to digital agriculture.
Following the announcement, Monsanto’s shares rose more than 6% to close around $125.15 on Monday afternoon. Bayer’s American-listed shares gained nearly 2.3% to close at $29.30.
Year to date, GuruFocus estimates Monsanto’s stock has gained 6% while Bayer's shares have fallen 6%.
The deal, which is the third major merger in its sector in the past couple years, is expected to close by the end of the second quarter. It was preceded by the DowDuPont (DWDP, Financial) and ChemChina-Syngenta deals in 2017.
Disclosure: No positions.
