Bayer to sell unit to BASF to ease Monsanto takeover

Germany's Bayer said Friday it would sell parts of its agrichemical business to rival BASF, kick-starting a competitor in the seeds market even as it clears the way for its mammoth takeover of US-based Monsanto.

Bayer is selling some of its Crop Science business to BASF to help clear the way for its pending $66 billion acquisition of Monsanto Co. Bayer announced Friday that it had signed an agreement to sell the units for 5.9 million euro, or about $7 billion.

"We are taking an active approach to address potential regulatory concerns, with the goal of facilitating a successful close of the Monsanto transaction,” Werner Baumann, Bayer chairman, said in a statement.

The $66 billion Bayer-Monsanto tie-up would create a world-spanning giant in seeds and pesticides, and the two firms have been mulling concessions to satisfy competition authorities—including the powerful European Commission—closely eyeing the merger plans.

Bayer said it needed an extra 10 working days in order to facilitate "an appropriate evaluation given the size of the transaction." That would take the deadline to Jan. 22, 2018, if approved, and pushes the deal's completion date into early 2018.

The European Commission said earlier this month it would put on hold its investigation into the Bayer-Monsanto tie-up—the largest merger in German history—to allow the companies time to offer new information.
Environmentalists and politicians on both sides of the Atlantic fear that the deal, which would create a global seeds and pesticides behemoth with annual revenues of around 23 billion euros and 140,000 employees, would give the combined firm too much power over the food chain.

As it opened an in-depth examination of the tie-up in August, the Commission expressed concern that Bayer produces one of the few alternatives to Monsanto's product glyphosate, the most sold non-selective herbicide in Europe.

Bayer said it expects full-year sales to rise to €49 billion ($58.7 billion), down 4% from its previous guidance and forecasts adjusted operating profit to grow "by a high-single-digit percentage" compared to its prior aim of a growth rate in the "low teens". Bayer reiterated Friday that is plans to close the Monsanto merger by early 2018. The company originally had said it planned to close the deal by the end of this year, but last month said it had pushed back the expected closing date.

BASF's purchase of the Bayer units will not go ahead unless the Monsanto deal is approved.