1
00:00:00,200 --> 00:00:04,400
Speaker 1: Virus plans sixty six billion dollar takeover it's American rival,

2
00:00:04,559 --> 00:00:07,720
Speaker 1: seeds giant Monsanto, is likely to be delayed until early

3
00:00:08,200 --> 00:00:12,040
Speaker 1: eighteen as talks with regulators intensified. The merger would create

4
00:00:12,080 --> 00:00:16,800
Speaker 1: the world's largest integrated pesticides and seeds company. European antitrust

5
00:00:16,880 --> 00:00:21,160
Speaker 1: regulators opened a comprehensive investigation into the deal in late August.

6
00:00:21,560 --> 00:00:25,720
Speaker 1: Liam Condon, chief of Buyer Crop Science, says he's very

7
00:00:25,800 --> 00:00:28,920
Speaker 1: confident the deal will ultimately go through based on the

8
00:00:28,920 --> 00:00:32,920
Speaker 1: tenor of negotiations so far. Joining us as Jennifer Ree,

9
00:00:32,920 --> 00:00:37,479
Speaker 1: senior litigation analyst for Bloomberg Intelligence, jen what are the

10
00:00:37,560 --> 00:00:40,680
Speaker 1: concerns were the merger like this in the midst of

11
00:00:40,720 --> 00:00:46,000
Speaker 1: an unprecedented wave of consolidation in the agro chemicals industry. Well,

12
00:00:46,000 --> 00:00:47,800
Speaker 1: I mean you just said it. That's the first thing.

13
00:00:47,840 --> 00:00:50,000
Speaker 1: You have a lot of consolidation in the industry, and

14
00:00:50,040 --> 00:00:52,840
Speaker 1: of course this is more and both in the US

15
00:00:52,920 --> 00:00:55,120
Speaker 1: and and the U, there are concerns about farmers, which

16
00:00:55,160 --> 00:00:57,760
Speaker 1: are the primary customers of all of these companies down

17
00:00:57,800 --> 00:01:00,920
Speaker 1: DuPont that just merged now Buyer Monsanto, as well as KEM,

18
00:01:01,000 --> 00:01:03,680
Speaker 1: China and Cygenda. So you know, what the EU is

19
00:01:03,720 --> 00:01:07,119
Speaker 1: concerned about are some overlaps between these two companies, Buyer

20
00:01:07,160 --> 00:01:10,880
Speaker 1: and Montanto in a couple different kinds of pesticides UM

21
00:01:10,880 --> 00:01:14,120
Speaker 1: as well as in some seats UM, as well as

22
00:01:14,200 --> 00:01:17,760
Speaker 1: the possibility that this combined company could bundle these products,

23
00:01:17,800 --> 00:01:20,320
Speaker 1: both of which are sold to farmers, and there could

24
00:01:20,360 --> 00:01:22,839
Speaker 1: be some harm that could come out of that ability.

25
00:01:23,760 --> 00:01:26,720
Speaker 1: So Jen, what is Buyer going to do with this

26
00:01:27,160 --> 00:01:29,959
Speaker 1: extra time, as it were, this delay in the takeover?

27
00:01:30,880 --> 00:01:34,320
Speaker 1: You know, I suspect and this is obviously just speculation

28
00:01:34,400 --> 00:01:37,880
Speaker 1: that what is happening is that they are working now

29
00:01:38,160 --> 00:01:41,480
Speaker 1: on negotiating remedies that they will have to agree to

30
00:01:41,600 --> 00:01:44,080
Speaker 1: with the EU in order to be able to close

31
00:01:44,120 --> 00:01:47,920
Speaker 1: their deal, and that they are they've decided that it's

32
00:01:47,960 --> 00:01:49,840
Speaker 1: worth it to them to have a little extra time

33
00:01:50,080 --> 00:01:53,480
Speaker 1: to try to make some arguments to limit what the

34
00:01:53,520 --> 00:01:56,560
Speaker 1: European regulators require them to sell off. And it's clear

35
00:01:56,560 --> 00:01:58,440
Speaker 1: they're going to have to sell assets, and they may

36
00:01:58,440 --> 00:02:00,440
Speaker 1: be simply trying to limit what it is they have

37
00:02:00,520 --> 00:02:06,120
Speaker 1: to sell there. And while they're discussing remedies with the regulators,

38
00:02:06,160 --> 00:02:11,399
Speaker 1: they're also holding talks with potential acquirers about some assets

39
00:02:11,440 --> 00:02:14,840
Speaker 1: that they may need to divest. It doesn't seem pretty

40
00:02:14,919 --> 00:02:19,359
Speaker 1: certain that the EU is going to require some substantial divestments. Oh,

41
00:02:19,440 --> 00:02:21,799
Speaker 1: I think so absolutely. You know, when they go into

42
00:02:21,800 --> 00:02:24,800
Speaker 1: a phase two, and then in particular, we know that

43
00:02:24,960 --> 00:02:28,079
Speaker 1: some assets were offered up early on during the Phase

44
00:02:28,120 --> 00:02:32,440
Speaker 1: one by Buyer in in the European Commission rejected that package.

45
00:02:32,760 --> 00:02:34,960
Speaker 1: So we do know that they expect investitures, and I

46
00:02:34,960 --> 00:02:37,720
Speaker 1: think it will be extensive. They did require down and

47
00:02:37,760 --> 00:02:41,079
Speaker 1: do Pont to divest assets um not seeds, but several

48
00:02:41,080 --> 00:02:43,960
Speaker 1: assets in the pesticide area, as well as Keim China

49
00:02:44,000 --> 00:02:46,520
Speaker 1: and Cententa to divest some chemicals in order to close

50
00:02:46,520 --> 00:02:48,760
Speaker 1: and I think we should expect that plus seeds and

51
00:02:48,800 --> 00:02:53,760
Speaker 1: maybe more. Here jen Uh Buyer is, you know, seeking

52
00:02:53,760 --> 00:02:56,680
Speaker 1: clearance from a lot of authorities around the globe who

53
00:02:56,720 --> 00:03:00,000
Speaker 1: have oversight of this kind of deal and various different

54
00:03:00,120 --> 00:03:04,760
Speaker 1: countries all over the world. If they get the EU

55
00:03:05,200 --> 00:03:09,160
Speaker 1: on board with whatever divestment they have to make, will

56
00:03:09,240 --> 00:03:11,519
Speaker 1: everything else fall into place or are they going to

57
00:03:11,639 --> 00:03:15,160
Speaker 1: have to deal similarly with other authorities? You know, it's

58
00:03:15,160 --> 00:03:18,359
Speaker 1: a good question. That is what usually happens, and that's

59
00:03:18,440 --> 00:03:21,440
Speaker 1: generally what happened in the Dow DuPont deal because in

60
00:03:21,480 --> 00:03:25,880
Speaker 1: that case, the European regulators required global divestitures by the company,

61
00:03:25,919 --> 00:03:29,600
Speaker 1: not not just divestitures that would have sold assets sold

62
00:03:29,639 --> 00:03:33,960
Speaker 1: within the European Union. So depending on what the EU

63
00:03:34,080 --> 00:03:37,040
Speaker 1: asks for here, if it's again this global remedy so

64
00:03:37,080 --> 00:03:40,040
Speaker 1: that it will cure concerns of other regulators, things might

65
00:03:40,120 --> 00:03:43,080
Speaker 1: just fall into place without any other regulators asking for

66
00:03:43,200 --> 00:03:46,880
Speaker 1: much more. But if not, other regulators could you know,

67
00:03:46,960 --> 00:03:51,040
Speaker 1: ask for certain smaller divestitures that might particularly affect the

68
00:03:51,160 --> 00:03:55,240
Speaker 1: cut consumers in their region. Buyer has sought clearance from

69
00:03:55,320 --> 00:03:59,080
Speaker 1: almost all of the roughly thirty authorities who have oversight

70
00:03:59,160 --> 00:04:02,400
Speaker 1: of the deal, and has received approvals from more than

71
00:04:02,480 --> 00:04:05,360
Speaker 1: one third of them. Does that seem low to you

72
00:04:05,480 --> 00:04:09,200
Speaker 1: when Buyer had previously said it expected to get approvals

73
00:04:09,360 --> 00:04:11,560
Speaker 1: to complete the transaction by the end of the year,

74
00:04:12,360 --> 00:04:14,560
Speaker 1: You know, it does actually seem a little bit low.

75
00:04:14,600 --> 00:04:17,640
Speaker 1: But sometimes what happens is some of the jurisdictions will

76
00:04:17,680 --> 00:04:22,040
Speaker 1: hang back and wait for sort of the the bigger jurisdictions,

77
00:04:22,080 --> 00:04:25,760
Speaker 1: the more key jurisdictions like the US, China, Europe, to

78
00:04:25,839 --> 00:04:28,440
Speaker 1: see what they're going to do in terms of the remedy.

79
00:04:28,279 --> 00:04:30,040
Speaker 1: They know there will be a remedy here, and they

80
00:04:30,080 --> 00:04:31,719
Speaker 1: want to hang back and see what that remedy is

81
00:04:31,720 --> 00:04:34,800
Speaker 1: going to be, um to understand whether or not they

82
00:04:34,880 --> 00:04:37,839
Speaker 1: might need something more to protect consumers in their regions.

83
00:04:37,880 --> 00:04:40,359
Speaker 1: So I think what's holding things up here is likely

84
00:04:40,400 --> 00:04:43,120
Speaker 1: the EU, which is really dragging here, as well as

85
00:04:43,120 --> 00:04:48,799
Speaker 1: the US. So jen assuming that uh, in fact, buyer

86
00:04:48,880 --> 00:04:51,400
Speaker 1: does have to divest a number of different things, and

87
00:04:51,800 --> 00:04:54,800
Speaker 1: they are in fact already talking, it sounds like to

88
00:04:55,440 --> 00:04:58,840
Speaker 1: some of the some of the potential acquirers, what can

89
00:04:58,880 --> 00:05:02,760
Speaker 1: we expect them to be vesting? What you know? Generally speaking, Well,

90
00:05:02,760 --> 00:05:05,440
Speaker 1: we do know from a press release that was issued

91
00:05:05,440 --> 00:05:07,800
Speaker 1: by the European Commission that there is a problem with

92
00:05:08,320 --> 00:05:11,360
Speaker 1: herbicides or beside is one kind of pesticide. The herbicides

93
00:05:11,600 --> 00:05:14,560
Speaker 1: essentially kill weeds, and in this case, mont Santo has

94
00:05:14,600 --> 00:05:18,320
Speaker 1: a product called Roundup and that overlaps with a product

95
00:05:18,400 --> 00:05:20,920
Speaker 1: that's sold by buyer, So it's very likely in that

96
00:05:21,000 --> 00:05:24,200
Speaker 1: area they're going to have divestitures. They also noted that

97
00:05:24,320 --> 00:05:27,720
Speaker 1: is the European Commission noted that there were seed overlaps,

98
00:05:27,760 --> 00:05:31,880
Speaker 1: particularly in oil seed rape seeds. And we also know

99
00:05:31,960 --> 00:05:35,039
Speaker 1: there's probably a problem with cotton seeds in the US

100
00:05:35,200 --> 00:05:38,440
Speaker 1: because when mont Santo acquired a company called Delta and

101
00:05:38,480 --> 00:05:41,240
Speaker 1: pine Land several years ago, they had to sell off

102
00:05:41,240 --> 00:05:43,479
Speaker 1: Delta and pine Lands cotton assets and they sold it

103
00:05:43,520 --> 00:05:46,479
Speaker 1: to Buyer. So at this point, there's no way that

104
00:05:46,560 --> 00:05:48,120
Speaker 1: buyer is going to have to be able to, you know,

105
00:05:48,160 --> 00:05:51,200
Speaker 1: combine those seeds again, those cotton seeds, so they'll likely

106
00:05:51,200 --> 00:05:55,520
Speaker 1: have to sell cotton seeds as well. Jen why this

107
00:05:55,680 --> 00:06:00,880
Speaker 1: wave of consolidation in the agro chemical industry, Well, you know,

108
00:06:00,960 --> 00:06:04,760
Speaker 1: it's likely that that's also a good question, and an

109
00:06:04,760 --> 00:06:07,320
Speaker 1: industry analyst could probably tell you more. But one of

110
00:06:07,360 --> 00:06:09,560
Speaker 1: the things we're seeing is that there is a lot

111
00:06:09,600 --> 00:06:13,240
Speaker 1: of need for innovation and R and D to you know,

112
00:06:13,279 --> 00:06:16,800
Speaker 1: to to meet rising demand, to deal with climate change

113
00:06:17,200 --> 00:06:20,080
Speaker 1: things like that that affect crops and affect the growth

114
00:06:20,080 --> 00:06:22,320
Speaker 1: of crops and our food supply. And it takes a

115
00:06:22,360 --> 00:06:24,880
Speaker 1: lot of money, a lot of capital, and and a

116
00:06:24,880 --> 00:06:27,000
Speaker 1: lot of scale to conduct the kind of R and

117
00:06:27,080 --> 00:06:30,120
Speaker 1: D that's needed. And that's exactly what Buyer and Monsanto

118
00:06:30,200 --> 00:06:32,320
Speaker 1: is arguing here that in order to conduct the kind

119
00:06:32,360 --> 00:06:34,080
Speaker 1: of innovation that they need to and R and d

120
00:06:34,240 --> 00:06:36,200
Speaker 1: going forward, they're going to be able to do that

121
00:06:36,279 --> 00:06:40,200
Speaker 1: much better off combined rather than individually. So can we

122
00:06:40,240 --> 00:06:45,039
Speaker 1: expect that this is gonna keep happening as throughout the

123
00:06:45,200 --> 00:06:48,320
Speaker 1: entire industry? Well, we may be. We may see it

124
00:06:48,360 --> 00:06:50,479
Speaker 1: continue to happen. I think one of the interesting things

125
00:06:50,560 --> 00:06:52,400
Speaker 1: that that could happen here though, because I was reading

126
00:06:52,400 --> 00:06:54,920
Speaker 1: an article today about B A. S F as one

127
00:06:54,920 --> 00:06:57,680
Speaker 1: of the possible buyers of the assets to be divested

128
00:06:57,680 --> 00:06:59,880
Speaker 1: by buyer in mont Santo, and the fact that the

129
00:07:00,040 --> 00:07:02,719
Speaker 1: company may be interested in both seeds and chemicals, and

130
00:07:02,800 --> 00:07:04,560
Speaker 1: B A. S F is a company that now has

131
00:07:04,640 --> 00:07:08,320
Speaker 1: chemicals and not seeds, So actually that sort of adds

132
00:07:08,320 --> 00:07:10,920
Speaker 1: to diversification here. It's sort of is a lessening of

133
00:07:10,960 --> 00:07:15,880
Speaker 1: consolidation if we add another combined seed chemical company into

134
00:07:15,920 --> 00:07:18,320
Speaker 1: the mix, because now you'll have four sort of big

135
00:07:18,320 --> 00:07:21,520
Speaker 1: combined seed chemical companies rather than three. We keep hearing

136
00:07:21,560 --> 00:07:25,840
Speaker 1: about the EU and the Commissioner, Margaret the Stayer, is

137
00:07:25,880 --> 00:07:29,640
Speaker 1: the EU seen as the toughest of the regulators? Well,

138
00:07:29,680 --> 00:07:32,680
Speaker 1: you know, I think right now, yes, and I think

139
00:07:32,720 --> 00:07:35,240
Speaker 1: that the US was considered pretty tough too. But now

140
00:07:35,240 --> 00:07:37,760
Speaker 1: we're in this transition stage and we still don't really

141
00:07:37,800 --> 00:07:40,400
Speaker 1: know what's going to happen going forward with the anti

142
00:07:40,400 --> 00:07:43,240
Speaker 1: trust agencies. Were still down three commissioners at the FTC.

143
00:07:43,760 --> 00:07:45,960
Speaker 1: We still don't have the head of the Antitrust Division

144
00:07:46,000 --> 00:07:50,800
Speaker 1: at the Department of Justice confirmed um appointed, but not confirmed,

145
00:07:50,840 --> 00:07:53,120
Speaker 1: And so we don't know what the trend is going

146
00:07:53,200 --> 00:07:55,440
Speaker 1: to be. But but most people think it's likely that

147
00:07:55,560 --> 00:07:57,680
Speaker 1: going forward in the next few years, the EU will

148
00:07:57,720 --> 00:08:00,400
Speaker 1: be the toughest on antitrust. Always great to have you on.

149
00:08:00,520 --> 00:08:04,040
Speaker 1: That's Jennifer Reaching, your litigation analyst for Bloomberg Intelligence. You

150
00:08:04,080 --> 00:08:06,240
Speaker 1: can read more of Jennifer's analysis by going to be

151
00:08:06,400 --> 00:08:08,080
Speaker 1: I go on the Bloomberg terminal