Bayer Acquisition of Monsanto Likely to Extend into 2018, Sources Say

CADE to Decide on Monsanto/Bayer by Year-End or Early 2018

Monsanto/Bayer CFIUS Review Following Normal Course

Monsanto / Bayer: International Antitrust Reviews

CEO, Manalo LLP

Roderick Manlo

Manalo LLP

We provide event driven research services to hedge fund managers and institutional investors that cover select definitive and pre-announced M&A deals, focusing on identifying and analysing the key upside and downside risks to a particular transaction. We primarily analyse $billion+ takeovers or mergers of publicly-traded European targets, but also look at deals globally to assess when there is a key European angle or aspect that can influence the deal outcome.

With over 16 years’ experience in risk arbitrage and investment banking, we specialise in providing research and advisory services on all facets of risk arbitrage, with particular expertise in:

- Cross-Border M&A
- Hostile Takeovers
- Local Takeover Codes
- Antitrust & Competition
- Financial Valuation
- Shareholder Vote Analysis
- Impacts of Precedent Transactions
- Risk Arbitrage Trading Strategies

Event-Driven

Sentiment in Monsanto continues its positive trend. After Berkshire Hathaway disclosed a 1.8% stake in February, and Monsanto and Bayer held a “productive” meeting with President Trump in January, late March and early April saw the EC approvals of Dow / DuPont and Syngenta / ChemChina, respectively, which implicitly increases the probability that Monsanto / Bayer is approved. It was flagged for quite some time by EC Commissioner Margrethe Vestager, but the focus on innovation was a priority for the commission during its review of Dow / DuPont. While it was easy for the EC to present concerns that the Dow / DuPont merger would have reduced innovation and price competition, the solution was quite simple: the companies simply needed to address horizontal concerns by selling overlaps in necessary markets (select DuPont pesticides businesses) and commit to selling DuPont’s global R&amp;D organisation. FMC Corp (FMC US) is a considered a formidable competitor and thus was sufficient to replace DuPont’s competitive effect.  It was reassuring for investors that the buyers for the divested assets from Dow / DuPont and Syngenta / ChemChina have been US-based and diverse (FMC Corp and privately-held AMVAC). This implies that other global buyers may be able and willing to purchase assets that Bayer or Monsanto will present to appease regulators. In March, both Syngenta and BASF commented that they would be interested in buying divested assets from Bayer. While the deal still has its share of antitrust and timing risks, the likelihood of European antitrust approval has greatly increased. We look at the key horizontal antitrust issues and believe that if the companies pursue the full divestiture plan mentioned above (i.e. sell Monsanto’s crop protection business, sell Bayer’s seeds business), securing antitrust approvals from a horizontal perspective is possible. Moreover, we note that, especially with the EC, it is imperative that the companies first find an upfront buyer.

Sentiment in Monsanto continues its positive trend. After Berkshire Hathaway disclosed a 1.8% stake in February, and Monsanto and Bayer held a “productive” meeting with President Trump in January, late March and early April saw the EC approvals of Dow / DuPont and Syngenta / ChemChina, respectively, which implicitly increases the probability that Monsanto / Bayer is approved.   It was flagged for quite some time by EC Commissioner Margrethe Vestager, but the focus on innovation was a priority for the commission during its review of Dow / DuPont. While it was easy for the EC to present concerns that the Dow / DuPont merger would have reduced innovation and price competition, the solution was quite simple: the companies simply needed to address horizontal concerns by selling overlaps in necessary markets (select DuPont pesticides businesses) and commit to selling DuPont’s global R&amp;D organisation. FMC Corp (FMC US) is a considered a formidable competitor and thus was sufficient to replace DuPont’s competitive effect.    It was reassuring for investors that the buyers for the divested assets from Dow / DuPont and Syngenta / ChemChina have been US-based and diverse (FMC Corp and privately-held AMVAC). This implies that other global buyers may be able and willing to purchase assets that Bayer or Monsanto will present to appease regulators. In March, both Syngenta and BASF commented that they would be interested in buying divested assets from Bayer. While the deal still has its share of antitrust and timing risks, the likelihood of European antitrust approval has greatly increased. We look at the key horizontal antitrust issues and believe that if the companies pursue the full divestiture plan mentioned above (i.e. sell Monsanto’s crop protection business, sell Bayer’s seeds business), securing antitrust approvals from a horizontal perspective is possible. Moreover, we note that, especially with the EC, it is imperative that the companies first find an upfront buyer.

Monsanto /​ Bayer: Horizontal Antitrust Issues

Monsanto Co

Monsanto / Bayer: Horizontal Antitrust Issues

Monsanto Co

Monsanto /​ Bayer: Horizontal Antitrust Issues

Monsanto / Bayer: Horizontal Antitrust Issues