Bayer to sell crop science businesses to BASF for up to $2 billion
Bayer has agreed to sell additional crop science businesses to BASF for up to €1.7 billion ($2 billion), following a 2017 sale agreement between the companies. Bayer is in the process of acquiring Monsanto, a St Louis, Missouri-headquartered agrochemical and seed company, for $66 billion, which contains conditions, including the divestment of certain Bayer businesses, for regulatory approval.
In March 2018, the European Commission conditionally approved Bayer’s proposed acquisition of Monsanto. Bayer has now received approvals for the transaction from substantially more than half of approximately 30 regulatory authorities, including those in Brazil and China. The acquisition conditions cover the divestment of certain Bayer businesses, including its global field crop seeds business such as canola, cotton, and soybean (with minor exceptions restricted to the Asia region), its research and development platform for hybrid wheat, its global vegetable seeds business, its global glufosinate ammonium business as well as certain glyphosate-based herbicides in Europe, predominantly for industrial use. In addition, the European Commission is requiring Monsanto’s global business with the nematicide, NemaStrike, to be divested. The conditions also stipulate the transfer of three Bayer research projects in the area of non-selective herbicides and the granting of a license to Bayer’s digital farming portfolio. BASF is the intended purchaser of these assets.
In October 2017, Bayer and BASF concluded an agreement for the sale of certain crop science businesses for a base purchase price of EUR 5.9 billion ($7.1 billion). The businesses in the first package, including Bayer’s global glufosinate-ammonium business and the related LibertyLink technology for herbicide tolerance, together with essentially all of the company’s field crop seeds businesses, generated total sales of EUR 1.5 billion ($1.8 billion) in 2017.
The most recent businesses to be sold generated total sales of EUR 745 million ($901 million) in 2017. “With this move, we are implementing the corresponding undertakings made to the European Commission and other regulatory authorities to allow the successful closing of the Monsanto transaction,” explained Werner Baumann, Chairman of the Board of Management of Bayer AG, in a company statement. “In BASF, we are pleased that, for these businesses too, we have found a strong buyer that will continue to serve the needs of growers and offer our employees long-term prospects.” The transaction is subject to regulatory approval as well as the successful closing of Bayer’s acquisition of Monsanto.
The businesses being divested include in particular the global vegetable seeds business, certain seed treatment products, the research platform for wheat hybrids and certain glyphosate-based herbicides in Europe that are predominantly used in industrial applications. In addition, three research projects in the field of total herbicides and Bayer’s digital farming business will also be transferred. In return, Bayer will receive a back license for certain digital farming applications.
The transaction includes the transfer of some 2,500 employees, around 150 of them in Germany. As part of the agreement, BASF has committed to maintain all permanent positions, under similar conditions, for at least three years after closing of the transaction.
Bayer will continue to own, operate, and maintain these businesses until the closing of this divestiture. After closing of the proposed Monsanto acquisition, Bayer will remain active in these same areas as a result of the programs, products, and offerings it acquires from Monsanto.
The base purchase price of €1.7 billion ($2 billion) before taxes will be subject to customary adjustments at closing. Bayer will use the proceeds from the announced divestiture after taxes and adjustments to partially refinance the proposed acquisition of Monsanto. Bayer will provide an update on the total expected synergies from the Monsanto acquisition latest upon closing of the transaction.