Bayer, Monsanto start $2.5 bln asset sale to get merger clearance – sources

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By Arno Schuetze and Greg Roumeliotis | FRANKFURT

FRANKFURT German drug and crop chemical maker
Bayer and U.S. seeds company Monsanto are
launching asset sales worth roughly $2.5 billion as they seek
regulatory clearance for their $66 billion merger, people close
to the matter said.

To kick off an auction process, Bayer’s advisors will send
out information packages next week to prospective bidders for
the businesses, which have been divided into three bundles of
assets, the people said.

Bayer and Monsanto have said in the past that they expect to
divest activities with combined sales of up to $1.6 billion.

While it could not be learned what businesses will be put on
the auction block, antitrust and industry experts expect Bayer
to potentially divest soybean, cotton and canola seed assets as
well as LibertyLink-branded crops that are resistant to its
glufosinate herbicide, an important alternative to Monsanto’s
Roundup Ready seeds.

Overall, regulatory hurdles to the deal are seen as
manageable because Bayer’s main business in agriculture is
pesticides while Monsanto’s focus is on genetically modified
seeds.

Bayer said last month that it was on track to clear all
regulatory hurdles for the takeover by year-end, including a
likely in-depth investigation by the European Union’s
competition regulators.

Peer BASF has been touted as a potential buyer of
some of the assets after abstaining from a wave of consolidation
in the agrochemicals industry, which also saw Dow and
DuPont merging and ChemChina buying Syngenta.

The assets, which comprise sets of different active
ingredients in several global regions, will also be shopped to
large private equity groups, which may, however, struggle to bid
competitively against players in the agricultural supplies
market, the sources said.

“Transaction security is more important than price,” one of
the people close to Bayer said.

Bayer and Monsanto declined to comment. (additional reporting by Ludwig Burger)



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