U.S. Regulators Approve Bayer-Monsanto Tie-Up

biggest seed in agricultural chemicals company. Speaking with Bloomberg earlier this month, Buyer CEO Werner Bauman was confident that regulator negotiations in the US and Europe would conclude soon. We announced another sale of anti trust assets to BSF and with it, I can confirm that we continue to be very confident, actually very confident that we are going to

close this transaction in quarter too. Joining us in our New York studios is Jennifer Ree, Bloomberg Intelligence senior litigation analysts. Jen what did Buyer have to give up to win approval from the US Justice Department, Well, they had to give up a lot. I mean, in this case, they're selling nine billion dollars worth of assets to be a s F. All of it's going to be a s F, which is really pretty huge in terms of a divestiture

package to get a deal through. I mean maybe compared to sixty six billion, which is what we see the deal is valued at it it doesn't seem so, but but it really is very, very big. And this is EU and US because a lot of the same assets were required to be sold by both jurisdictions with I think a few differences at the fringes but um and if you added on by the US. But this is really, you know, a very large package and including lots of seeds, lots of traits, lots of R and D, as well

as crop protection. So jen there have been several deals as we've talked about involving seed and crop chemical firms globally. This deal will leave three mega companies and farmers are concerned about higher prices and less choice. Does it seem as if they have a point? Certainly with the less choice they're cutting it down, Well, you know, I think so.

But the reason for these divestitures and part of the reason this is such a huge package all going to one entity B A s F is that the idea is that the depart that that remedy is meant to remedy the harm that could occur. And so at the end of the day, you don't really have three big integrated agricultural entities left. You really have four, because what you're doing is you're turning B A. S F into an entity that's very similar to Dowdy Pont, to Kemp,

China's and Genta and now to Buyer Montsanto. They were very active on the chemical side, and the crop protection side didn't it didn't have seats. But they're now buying a very very large package of seeds as well as R and D from Buyer to put them in place to compete with the other three entities. And that's the purpose of a remedy. Now, so does the merger of Buyer and Montsant Monsanto makes send Now with all the things that's had to do to satisfy regulators, well, the

synergies and the competitive advantages still be there, I think. So, you know, obviously, if they didn't think at this stage that what they're being asked to divest, you know, kills their efficiencies and the synergies that they would have gained, they likely wouldn't go forward with the deal, you know, they would have abandoned it. I think months ago when they began to understand exactly what it was going to

take to try to get this get this through. And you know, even though they're selling a lot of buyers seeds, you know, they are still getting this combination of Buyers chemicals with Monsanto seats, which is really what they wanted, Monsanto having the bigger heritage and the seeds and Buyer

having the bigger heritage on the chemical side. So it took about two years for the seal to go through almost So what does it signal about the Justice Department and its antitrust stanced if anything, that they're willing to work with companies or go to court. Has we've seen an A T and T time Warner. I you know, I don't think it's signal very much. Some of these really big and complicated deals have been taking a long time.

This was about twenty one months, but remember it was well underway before the new head of the Antitrust Division

at the Department of Justice stepped into his position. Um. I think one of the things though, it shows is that he is standing by some of the statements he made earlier this year that he doesn't really believe in what we call conductor behavioral remedies because here he saw some vertical concerns, and it has been historically the practice to remedy a vertical problem with the behavioral with a behavioral remedy rather than asset sales. And here this is

all asset sales. And so he's showing that he he means what he says when he says he doesn't like the option of a behavioral remedy because he doesn't want to have to keep the track. Can we discern any clues on what this may mean for future deals such a you know that need government approval like uh Sprint and T Mobile. Well, it shows that they're going to vigorously investigate these deals and and where they truly have concerns, they're going to require assets to be sold in order

to remedy those concerns. I think I think that that deal in particular will will have a tough time, and I'm not so sure that they're going to be able to get get it cleared. They're going to have to convince them that what they're going to be able to innovate in five g is sort of outweighs the anti

competitive effect. Let's say that you might get from reducing from four big competitors to three in that market, And I think that might be a tough argument, and I do think they're going to face a pretty tough investigation. Jen what other pending deals are looking pretty iffy because

of the Justice Department's tough stance. Well, you know, it's really hard to understand what's going to happen going forward with some of these deals that are really just vertical in nature, like CBS is deal um expressed express scripts.

It's hard to say that with sign you know, because like I said, historically these deals have had some very nice pro competitive aspects to them because it's a vertical integration rather than a deal where a competitors being taken out of the market um, And they have historically been remedied by these behavioral conditions, which I think are more palatable in for these companies in a vertical deal than

selling off assets. And it's hard to understand what will happen with those going those sorts of deals going forward if in fact, behavioral remedies are off the table. For this Department of Justice. And let's turn to a big date coming up. That is the decision by the judge in the A. T and T Time Warner case. Tell us about that, well, we expect that on June twelfth, which is sort of a nice treat for the judge to tell everybody, Okay, June twelfth is the day I'm

coming out of this big decision. It's a lot of pressure and I think there's gonna be a lot of news media descending on the courthouse on that day because we don't always know when these decisions are going to get publicized. Um, it'll be interesting to see. I suspect that if the Department of Justice loses that case, it's likely that they will appeal, um and to keep the companies from closing, they're going to have to seek an

emergency injunction just to keep them apart. Are pending the appeal, and it's it's if he has to whether they'll win that or not. So even if an appeal goes forward, it's possible the companies may still be able to close if they win. And we do want to hit this breaking news that the ABC television network has canceled the Rosanne Show. You know that they brought it back, but we wanted to mention that because you know, the show was right. Yeah, and well it was. There was a

little controversy surround. There was a little controversy surround, a little off topic, I know, but that's a breaking news story. No, it's it's it's very interesting. Jen, we're talking. We can discuss about ABC, but we don't have time. We can discuss about what's happening with that with all the media um mergers that are afoot. Thanks so much, Jim. That's Bloomberg Intelligence Senior litigation analyst Jennifer Ree. Thanks for listening

to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple podcast, SoundCloud, and on Bloomberg dot com slash podcast. I'm June Basso. This is Bloomberg, The Gut, the Junta du Contation.