Bayer reaches deal with US for approval to buy Monsanto - reports
Bayer shares jumped nearly 5pc on Tuesday following a media report that the U.S. Justice Department will allow the German drugs and pesticides group to acquire Monsanto 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 and agreed to make concessions related to digital agriculture, it said.
Baader Helvea analyst Markus Mayer said he expects 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,” Mayer 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 pc 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. A souring global farm economy has spurred consolidation among the major players, triggering protests from environmental and farming groups worried about their market power.
The deal reduces competition for sales of seeds and chemicals to farmers struggling with low crop prices, raising the risk for price gouging, said Wenonah Hauter, executive director for Food & Water Watch, an advocacy group.