Bayer shares jump on report of DoJ nod

FRANKFURT: Bayer AG shares jumped nearly 5% yesterday following a media report that the US Justice Department will allow the German drugs and pesticides group to acquire Monsanto Co in a $62.5 billion deal.

The Justice Department reached an agreement in principle with Bayer and Monsanto in recent days after the companies agreed to sell more assets, the Wall Street Journal said late on Monday, citing people familiar with the matter.

Under the deal, Bayer agreed to sell additional seed and treatment assets to BASF SE and agreed to make concessions related to digital agriculture, it said.

Bayer shares climbed as much as 5.5%, the most since November 2016. The stock traded at €97.75 at 9.17 a.m. in Frankfurt.

Baader Helvea analyst Markus Mayer said he expected the concessions granted to the Justice Department probably did not go far beyond asset sales already agreed with the European Commission.

“The selling of these assets and the rights issue ... should start therefore soon and should be positive triggers for the stock,” he said, adding the rights issue should be smaller than initially expected.

Shares of Monsanto, the world’s biggest seed company, approached a four-year high on the news in New York on Monday, before closing up 6.2% at $125.15.

The takeover, one of a trio of major deals in the agribusiness sector in recent years, would create a company with a share of more than a quarter of the world’s seed and pesticides market.

Bayer declined comment on the report, but said in a statement it still anticipated closing the Monsanto purchase in the second quarter.

BASF, Monsanto and the Justice Department declined to comment.