By Anthony Shevlin and Natalia Drozdiak 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 14, 2017).

Bayer AG on Friday said it has agreed to sell parts of its crop-science business to rival BASF SE for EUR5.9 billion ($6.98 billion), a bid to assuage regulators as the German chemical conglomerate seeks approval for its $57 billion acquisition of U.S. seed maker Monsanto Co.

Bayer said it would use the net proceeds from the transaction to partially refinance the purchase of Monsanto, a deal struck last year that would create an industrial powerhouse and tilt the German company heavily toward agriculture in a long-range bet on high-tech crops.

But the megadeal still faces scrutiny from U.S., European and other antitrust regulators.

"We are taking an active approach to address potential regulatory concerns, with the goal of facilitating a successful close of the Monsanto transaction," said Werner Baumann, Bayer's chief executive.

The European Union in August opened an in-depth investigation into the Bayer-Monsanto deal, saying it had "serious doubts" because it could add pressure on farmers already struggling with low crop prices. Brazil's competition authority in early October also said it would scrutinize the transaction. The U.S. is also carrying out a review.

Bayer's deal with BASF is contingent on the successful completion of the Monsanto deal, which is expected to happen early next year.

Under the deal announced Friday, BASF will acquire Bayer's manufacturing sites for glufosinate-ammonium production and formulation in Germany, the U.S. and Canada; its seed-breeding facilities in the Americas and Europe; and its trait-research facilities in the Americas and Europe.

The businesses included in the agreement with BASF generated about EUR1.3 billion in net sales for 2016, or less than 3% of Bayer's total.

The seeds businesses being divested include Bayer's cotton-seed business, with the exception of India and South Africa, as well as its North American and European canola-seed businesses and the soybean-seed business.

When it spelled out its concerns with the deal, the EU in August said Bayer and Monsanto had a high market share in the breeding or licensing -- and in some cases both -- of vegetable, canola and cotton seeds. The EU also noted the two companies were the only firms among a limited number of competitors capable of discovering new active ingredients and new formulas, such as those that could tackle the problem of weed resistance to existing herbicides.

Bayer and Monsanto are seeking approval after the EU and other antitrust bodies cleared the merger of Dow Chemical Co. and DuPont Co., as well as China National Chemical Corp.'s roughly $43 billion takeover of Swiss seed and pesticide maker Syngenta AG. The companies made considerable divestitures to win approval in both cases.

BASF last year said it would monitor the antitrust concerns over the big tie-ups to possibly snap up any assets the companies would have to unload.

"With this acquisition, we are seizing the opportunity to purchase highly attractive assets in key row crops and markets," BASF Chief Executive Kurt Bock said Friday.

Bayer said BASF has committed to maintaining all permanent positions for at least three years after the transaction is completed. More than 1,800 Bayer personnel will transfer to BASF.

Write to Natalia Drozdiak at natalia.drozdiak@wsj.com

 

(END) Dow Jones Newswires

October 14, 2017 02:47 ET (06:47 GMT)

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