Shares of Bayer Surge As Report Says Antitrust Deal Reached

Shares of Bayer were up over 5% on Tuesday after a report was published that said the U.S. Department of Justice would allow Bayer, the drugs and pesticides company based in Germany to buy Monsanto for $62.5 billion.

The U.S. Justice Department has reached a deal in principle with Monsanto and Bayer over the last couple of days after both companies agreed they would sell additional assets, said a report late Monday by the Wall Street Journal, which cited people close to the matter.

In this agreement, Bayer has agreed to sell BASF more of its seed and treatment assets and make concessions with digital agriculture, said the report.

Shares of Bayer were 4.7% higher as of early Tuesday trading in Germany.

An analyst in Germany said that he expects the latest concessions that Bayer has granted the U.S. Department of Justice likely do not go that far beyond that for sales of assets already agreed to with the company and the European Commission.

Monsanto, the largest seed company in the world, saw its share price approach a high of four years after the news was made public late Monday in New York closing 6.2% higher.

The takeover, which is one of three major agribusiness sector deals in the last few years, would create an entity with a share of over a quarter of the world’s pesticide and seeds market.

As the global farm economy has soured consolidation has been spurred amongst the largest players, which triggered protesting from farming and environmental groups worried over their power in the market.

This deal lowers the amount of competition for seeds and chemicals sales to farmers that are struggling with low prices for their crops, increasing the risk of price gouging, said one advocacy group in Washington.

Bayer has not yet made any comment regarding the WSJ report, but did say through a prepared statement that it was still anticipating the closing of the purchase of Monsanto during the second quarter of this year.

Monsanto said last week in its quarterly earnings report it remained confident the U.S. as well as other regulatory approvals would be received during the second quarter of 2018.

Last month, the Department of Justice said that it was continuing to review the deal and noted that seeds which are genetically modified are for the most part prohibited across Europe while widely used across the U.S.

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