Bayer, Monsanto likely to extend merger deadline

The mega merger between agrochemical multinationals Bayer and Monsanto is taking more time than earlier envisaged. Announced a year ago, the deal was to achieve closure by the end of 2017.

However, regulators in key markets like the European Union, America, Brazil and India are yet to approve the $66-billion deal. Industry sources say both companies are likely to meet and extend the proposed closure date.

According to the terms announced in September last year, Bayer pledged to pay Monsanto $2 billion if the deal was blocked by regulators. Sources say both companies are optimistic about the approval coming through, although a little late.

Because of the duo’s far-flung operations and markets, the deal would require approval from about 30 regulatory agencies around the world, including anti-trust enforcers. Another reason for both companies to agree on extension is that last week, DowDuPont announced the successful completion of the merger between Dow Chemical Company and E.I. du Pont de Nemours & Company, effective August 31. The two chemical giants had announced a merger intention in 2015.

A Monsanto spokesperson could not be reached. A Bayer spokesperson declined to comment.

There are more reasons for extending the time to be taken, as the European Union’s anti-trust authorities have launched a probe into the proposed mega merger, which would reshape the global agri-business industry and create the world’s largest supplier of seeds and crop chemicals. The authorities have raised concern that the deal would “reduce competition in a number of different markets, resulting in higher prices, lower quality, less choice and less innovation”, it had said a fortnight ago when it announced the probe.

The Competition Commission of India is still studying the proposal, according to sources. The South African authority has approved.

Meanwhile, Monsanto India, as part of their normal business strategy, has announced sale of its seed business. A Monsanto India spokesperson said, “Over last year, we have implemented a series of global actions in our businesses to help pro-actively manage through current market challenges while strategically positioning our businesses for future growth. In line with the strategic choices for our businesses in India, we plan to enhance focus on our existing businesses in corn, crop protection, vegetables, biologicals, Bollgard II® technology solutions and digital agriculture. Given the strategic choices, we have signed an agreement with Tierra Agrotech Pvt Ltd to pursue the sale of the branded cotton seed business, which will be effective subsequent to the necessary approvals.”

Monsanto’s genetically modified cotton seed technology is licensed to 49 companies and that business is under Mahyco Monsanto Biotech, an equal joint venture between Mahyco and Monsanto Holdings Pvt Ltd.