Bayer selling $9B in assets ahead of Monsanto merger

WASHINGTON -- German pharmaceutical giant Bayer AG has agreed to the U.S. government's demand it sell about $9 billion in agriculture businesses as the condition for acquiring Monsanto Co., a U.S. seed and weed-killer maker.

Antitrust regulators at the Justice Department say it's the biggest divestiture ever required for a merger. The regulators say they directed Bayer to divest assets such as vegetable oils, seeds and seed treatments to ensure fair competition and prevent price spikes after the massive agriculture business deal goes through. The assets will be sold to BASF, a German chemical company.

"As a result, American farmers and consumers will continue to benefit from competition in this industry," the Justice Department said in a statement.

Without the sale of Bayer assets, the merger of two of the world's largest agricultural companies "would likely result in higher prices, lower quality and fewer choices across a wide array of seed and crop-protection products," the statement said. "The merger also threatened to stifle the innovation in agricultural technologies that has delivered significant benefits to American farmers and consumers."

Bayer's $57 billion proposed takeover of Monsanto has been watched by competitors and environmental groups, which are fearful the number of players in the business of selling seeds and pesticides will shrink further and give a single company a stranglehold on the food chain.

Monsanto, based in St. Louis, is one of the world's biggest seed companies. The merger would make Bayer the largest supplier in the world of pesticides and seeds for farmers.

"This merger is going to have a devastating effect on African-American farmers and other small farmers," John Boyd, founder and president of the National Black Farmers Association, said in a telephone interview. "It means higher prices for small farmers, and more black farmers will end up going out of business due to these higher seed prices."

The divestiture proposal will be filed in federal court and opened to public comment for 60 days.

In March, the European Union approved the merger on condition Bayer sell $7.4 billion in assets to BASF to eliminate overlaps in seed and pesticide markets. The U.S. Justice Department said after the European action it continued to have concerns over the proposed deal, especially its potential effect on American farmers and consumers, which could differ from its effects in Europe. Genetically modified seeds, for example, are used widely in the U.S. but mostly banned in Europe.