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Jacob Maslow
Jacob Maslow
Articles (117)  | Author's Website |

Bayer Agrees to Sell Liberty to Get Green Light for Monsanto Merger

Company is divesting itself to gain antitrust approval

May 15, 2017 | About:

Bayer (XTER:BAYN) has agreed to give up its Liberty Link seeds and Liberty herbicide to gain antitrust approval for its $66 billion acquisition of Monsanto (NYSE:MON), the company reported on Monday.

The move came after the South Africa Competition Commission reviewed the issue over the weekend and asked for $2.5 billion in asset sales.

"Bayer has agreed to these conditions and is evaluating how best to execute the imposed divestiture," said the company in a statement. "As previously communicated, Bayer has been anticipating that regulatory authorities could require certain divestitures. Bayer will continue working with regulators globally with a view to receiving approval of the proposed transaction by the end of 2017."

Bayer's Liberty brands are direct competitors to Monsanto's Roundup Ready seeds and Roundup pesticides.

LibertyLink seeds are used primarily by cotton, soy and canola growers as an alternative to Monsanto's Roundup Ready seeds when weeds become resistant to the Roundup herbicide.

The sale of Bayer's Liberty brand will account for the majority of the $2.5 billion in asset sales needed to win antitrust approval.

The divestitures were widely expected to be required by antitrust officials in larger markets, like the European Union and the U.S.

"Bayer will continue working with regulators globally with a view to receiving approval of the proposed transaction by the end of 2017," said Bayer.

Werner Bauma, CEO of Bayer, said in April at the annual shareholder meeting that the company is planning to create substantial added value in the long term through the transaction.

"We are optimistic for 2017 – and beyond," he said.

Bayer's sales in 2016 increased by 1.5% to 46.8 billion euros. Adjusted sales rose by 3.5%, and revenue grew by 10.2% to 11.3 billion. Earnings per share came to 7.23 euros, up 7.3%.

The company's Life Science business accounted for 34.9 billion euros of its total sales, up 4.7% year on year.

But the company failed to meet the targets for its self-care products in 2016. Sales increased by just 3.5%, which was in line with competing brands.

The company's Pharmaceuticals unit grew by 8.7% to 16.4 billion euros, outpacing the market. But Bayer still faces challenges with its Conceptus Inc. subsidiary, maker of the Essure contraceptive procedure.

Essure is under fire, as women file lawsuits complaining the procedure left them in pain and led to unintended pregnancies.

Bayer, along with Monsanto, began selling assets in March to comply with the $2.5 billion in asset sales needed to gain regulatory approval, sources close to the matter said.

Disclosure: The author does not own any stake in the listed companies.

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About the author:

Jacob Maslow

Jacob Maslow is a writer and marketing specialist who began his career as a payroll manager. The same affinity for numbers that originally led him to an early career in accounting now comes in handy when it comes to understanding and working with marketing analytics.

A native of New York, Maslow is now based in the Middle East, where he lives with his wife and five children and provides high-quality services to clients in a variety of industries, including the legal, medical and financial sectors.

In addition to his marketing and consulting work, Maslow has founded a variety of news websites, including Legal Scoops. He is a frequent contributor to a variety of publications including business.com and business2community.com.

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