BASF in Exclusive Talks to Acquire Bayer’s Vegetable Seeds Business

By Nathaniel Valyo, International Business Writer

The German multinational company, BASF Corporation is in exclusive talks to acquire Bayer’s entire vegetable seed business, according to the officials from both chemical giants.

Bayer, which also recognizes Germany as its home market, is looking to address European antitrust regulators’ concerns over their pending acquisition of the American food giant, Monsanto. According to European Union Competition Commissioner, Margrethe Vestager, the pharmaceutical company has suggested BASF take over their vegetable seed unit in order to ensure “effective competition and innovation in seeds, pesticides, and digital agriculture markets.” The $62.5 billion mega-acquisition of Monsanto by Bayer has been in the works since July 2017 but has been delayed multiple times by the European Union due to concerns that Bayer would assume too much control in the markets. “We need competition to ensure farmers have a choice of different seed varieties and pesticides at affordable prices,” said Ms. Vestager.

A successful transaction would help BASF, the fourth largest producer of pesticides in the world, to gain a significant advantage in the vegetable seed business – an industry they have previously avoided. In October 2017, Bayer agreed to sell parts of its business to BASF for $7.2 billion, including its glufosinate-ammonium business, its LibertyLink technology used in pesticides, and “essentially all” of their field crop-based seed business. In its report on this new deal, Farm Futures said that BASF would acquire the rest of Bayer’s vegetable seeds business for roughly $1.85 billion including assumed debt, which entails Bayer’s oilseed canola business in North America and Europe, and their global soybean and cotton businesses.

Bayer has already been given a green light by the European Union for their acquisition of Monsanto, a move that would make them the world’s largest producer of both seeds and pesticides. The EU stated that Bayer’s request to bolster BASF with their vegetable seed business was sufficient enough to receive confirmation for the acquisition. “[Our approval has] made sure that the number of global players actively competing in these markets stays the same,” said Ms. Vestager at a press conference regarding the approval. Bayer plans to complete the acquisition by the end of the second quarter, according to company statements. “Receipt of the European Commission’s approval is a major success and a significant milestone,” said Bayer CEO Werner Baumann.

Ms. Vestager and the EU have received criticism from environmentalists for approving the acquisition, including American actor Mark Ruffalo, who called the purchase a “merger from hell.” Adrian Bebb of Friends of the Earth Europe said that the EU’s approval allows BASF, Bayer, and Monsanto to “become data giants in agriculture, the Facebooks of farming, with all the pitfalls that entail.” The criticisms arose from a concern over the health and well-being of humans, farmers, and the environment. Ms. Vestager, however, claims these concerns are beyond the competition policy laid out by the EU.

The Bayer-Monsanto acquisition is just the latest shake-up in the global agrochemical business. Last year, the Dow Chemical Company merged with DuPont Company to form DowDuPont worth $130 billion, alongside ChemChina acquiring Syngenta for $43 billion in April. Bayer still has to receive approval from the U.S. Department of Justice to resolve more antitrust concerns, including opposition from regulators who are pushing for them to relinquish more assets first; nonetheless, Bayer continues to express confidence in approval from the U.S.

 

A version of this article appeared in the Tuesday, April 10th print edition.

Contact Nathaniel at

nathaniel.valyo@student.shu.edu

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