1 00:00:03,480 --> 00:00:07,560 Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every 2 00:00:07,640 --> 00:00:10,440 Speaker 1: day we bring you insight and analysis into the most 3 00:00:10,480 --> 00:00:13,399 Speaker 1: important legal news of the day. You can find more 4 00:00:13,480 --> 00:00:18,040 Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud 5 00:00:18,320 --> 00:00:22,200 Speaker 1: and on Bloomberg dot com slash podcasts. Buyer has won 6 00:00:22,239 --> 00:00:25,440 Speaker 1: antitrust approval from the US for its sixty six billion 7 00:00:25,480 --> 00:00:29,360 Speaker 1: dollar acquisition of mont Santo, removing the last regulatory hurdle 8 00:00:29,440 --> 00:00:31,160 Speaker 1: standing in the way of what will be the world's 9 00:00:31,200 --> 00:00:35,680 Speaker 1: biggest seed in agricultural chemicals company. Speaking with Bloomberg earlier 10 00:00:35,720 --> 00:00:39,480 Speaker 1: this month, Buyer CEO Werner Bauman was confident that regulator 11 00:00:39,520 --> 00:00:44,040 Speaker 1: negotiations in the US and Europe would conclude soon. We 12 00:00:44,200 --> 00:00:49,840 Speaker 1: announced another sale of anti trust assets to BSF and 13 00:00:50,159 --> 00:00:53,320 Speaker 1: with it, I can confirm that we continue to be 14 00:00:53,400 --> 00:00:56,640 Speaker 1: very confident, actually very confident that we are going to 15 00:00:56,680 --> 00:00:59,920 Speaker 1: close this transaction in quarter too. Joining us in our 16 00:01:00,000 --> 00:01:04,720 Speaker 1: New York studios is Jennifer Ree, Bloomberg Intelligence senior litigation analysts. 17 00:01:05,200 --> 00:01:07,920 Speaker 1: Jen what did Buyer have to give up to win 18 00:01:08,040 --> 00:01:11,920 Speaker 1: approval from the US Justice Department, Well, they had to 19 00:01:11,920 --> 00:01:13,680 Speaker 1: give up a lot. I mean, in this case, they're 20 00:01:13,720 --> 00:01:16,679 Speaker 1: selling nine billion dollars worth of assets to be a 21 00:01:16,880 --> 00:01:18,640 Speaker 1: s F. All of it's going to be a s F, 22 00:01:19,200 --> 00:01:22,120 Speaker 1: which is really pretty huge in terms of a divestiture 23 00:01:22,160 --> 00:01:24,480 Speaker 1: package to get a deal through. I mean maybe compared 24 00:01:24,520 --> 00:01:26,560 Speaker 1: to sixty six billion, which is what we see the 25 00:01:26,560 --> 00:01:29,560 Speaker 1: deal is valued at it it doesn't seem so, but 26 00:01:29,560 --> 00:01:32,280 Speaker 1: but it really is very, very big. And this is 27 00:01:32,319 --> 00:01:35,200 Speaker 1: EU and US because a lot of the same assets 28 00:01:35,200 --> 00:01:38,200 Speaker 1: were required to be sold by both jurisdictions with I 29 00:01:38,200 --> 00:01:41,760 Speaker 1: think a few differences at the fringes but um and 30 00:01:42,080 --> 00:01:44,400 Speaker 1: if you added on by the US. But this is really, 31 00:01:44,560 --> 00:01:47,520 Speaker 1: you know, a very large package and including lots of seeds, 32 00:01:47,920 --> 00:01:51,280 Speaker 1: lots of traits, lots of R and D, as well 33 00:01:51,360 --> 00:01:57,200 Speaker 1: as crop protection. So jen there have been several deals 34 00:01:57,240 --> 00:02:01,040 Speaker 1: as we've talked about involving seed and crop chemical firms globally. 35 00:02:01,080 --> 00:02:05,520 Speaker 1: This deal will leave three mega companies and farmers are 36 00:02:05,520 --> 00:02:08,960 Speaker 1: concerned about higher prices and less choice. Does it seem 37 00:02:09,000 --> 00:02:10,880 Speaker 1: as if they have a point? Certainly with the less 38 00:02:10,960 --> 00:02:13,720 Speaker 1: choice they're cutting it down, Well, you know, I think so. 39 00:02:13,800 --> 00:02:16,000 Speaker 1: But the reason for these divestitures and part of the 40 00:02:16,040 --> 00:02:18,239 Speaker 1: reason this is such a huge package all going to 41 00:02:18,320 --> 00:02:21,040 Speaker 1: one entity B A s F is that the idea 42 00:02:21,280 --> 00:02:23,960 Speaker 1: is that the depart that that remedy is meant to 43 00:02:24,720 --> 00:02:27,079 Speaker 1: remedy the harm that could occur. And so at the 44 00:02:27,160 --> 00:02:29,320 Speaker 1: end of the day, you don't really have three big 45 00:02:29,360 --> 00:02:32,840 Speaker 1: integrated agricultural entities left. You really have four, because what 46 00:02:32,880 --> 00:02:34,880 Speaker 1: you're doing is you're turning B A. S F into 47 00:02:34,919 --> 00:02:37,679 Speaker 1: an entity that's very similar to Dowdy Pont, to Kemp, 48 00:02:37,760 --> 00:02:40,680 Speaker 1: China's and Genta and now to Buyer Montsanto. They were 49 00:02:40,800 --> 00:02:43,080 Speaker 1: very active on the chemical side, and the crop protection 50 00:02:43,080 --> 00:02:45,560 Speaker 1: side didn't it didn't have seats. But they're now buying 51 00:02:45,560 --> 00:02:47,960 Speaker 1: a very very large package of seeds as well as 52 00:02:48,080 --> 00:02:50,280 Speaker 1: R and D from Buyer to put them in place 53 00:02:50,360 --> 00:02:53,200 Speaker 1: to compete with the other three entities. And that's the 54 00:02:53,200 --> 00:02:56,920 Speaker 1: purpose of a remedy. Now, so does the merger of 55 00:02:57,040 --> 00:03:01,440 Speaker 1: Buyer and Montsant Monsanto makes send Now with all the 56 00:03:01,480 --> 00:03:04,840 Speaker 1: things that's had to do to satisfy regulators, well, the 57 00:03:04,840 --> 00:03:09,240 Speaker 1: synergies and the competitive advantages still be there, I think. So, 58 00:03:09,360 --> 00:03:11,840 Speaker 1: you know, obviously, if they didn't think at this stage 59 00:03:11,880 --> 00:03:14,760 Speaker 1: that what they're being asked to divest, you know, kills 60 00:03:14,760 --> 00:03:17,200 Speaker 1: their efficiencies and the synergies that they would have gained, 61 00:03:17,240 --> 00:03:19,440 Speaker 1: they likely wouldn't go forward with the deal, you know, 62 00:03:19,440 --> 00:03:22,040 Speaker 1: they would have abandoned it. I think months ago when 63 00:03:22,040 --> 00:03:24,239 Speaker 1: they began to understand exactly what it was going to 64 00:03:24,360 --> 00:03:26,760 Speaker 1: take to try to get this get this through. And 65 00:03:26,800 --> 00:03:30,280 Speaker 1: you know, even though they're selling a lot of buyers seeds, 66 00:03:30,680 --> 00:03:33,880 Speaker 1: you know, they are still getting this combination of Buyers 67 00:03:33,919 --> 00:03:36,960 Speaker 1: chemicals with Monsanto seats, which is really what they wanted, 68 00:03:37,200 --> 00:03:40,000 Speaker 1: Monsanto having the bigger heritage and the seeds and Buyer 69 00:03:40,040 --> 00:03:42,840 Speaker 1: having the bigger heritage on the chemical side. So it 70 00:03:42,880 --> 00:03:45,360 Speaker 1: took about two years for the seal to go through 71 00:03:45,360 --> 00:03:49,480 Speaker 1: almost So what does it signal about the Justice Department 72 00:03:49,480 --> 00:03:53,120 Speaker 1: and its antitrust stanced if anything, that they're willing to 73 00:03:53,160 --> 00:03:56,680 Speaker 1: work with companies or go to court. Has we've seen 74 00:03:56,720 --> 00:03:58,760 Speaker 1: an A T and T time Warner. I you know, 75 00:03:58,800 --> 00:04:01,320 Speaker 1: I don't think it's signal very much. Some of these 76 00:04:01,400 --> 00:04:04,760 Speaker 1: really big and complicated deals have been taking a long time. 77 00:04:04,800 --> 00:04:07,720 Speaker 1: This was about twenty one months, but remember it was 78 00:04:07,840 --> 00:04:10,920 Speaker 1: well underway before the new head of the Antitrust Division 79 00:04:10,920 --> 00:04:14,080 Speaker 1: at the Department of Justice stepped into his position. Um. 80 00:04:14,200 --> 00:04:16,000 Speaker 1: I think one of the things though, it shows is 81 00:04:16,040 --> 00:04:18,640 Speaker 1: that he is standing by some of the statements he 82 00:04:18,680 --> 00:04:20,760 Speaker 1: made earlier this year that he doesn't really believe in 83 00:04:20,760 --> 00:04:24,440 Speaker 1: what we call conductor behavioral remedies because here he saw 84 00:04:24,520 --> 00:04:27,600 Speaker 1: some vertical concerns, and it has been historically the practice 85 00:04:27,880 --> 00:04:30,800 Speaker 1: to remedy a vertical problem with the behavioral with a 86 00:04:30,880 --> 00:04:34,760 Speaker 1: behavioral remedy rather than asset sales. And here this is 87 00:04:34,800 --> 00:04:37,479 Speaker 1: all asset sales. And so he's showing that he he 88 00:04:37,520 --> 00:04:39,520 Speaker 1: means what he says when he says he doesn't like 89 00:04:39,720 --> 00:04:42,080 Speaker 1: the option of a behavioral remedy because he doesn't want 90 00:04:42,120 --> 00:04:47,200 Speaker 1: to have to keep the track. Can we discern any 91 00:04:47,320 --> 00:04:52,120 Speaker 1: clues on what this may mean for future deals such 92 00:04:52,120 --> 00:04:55,200 Speaker 1: a you know that need government approval like uh Sprint 93 00:04:55,240 --> 00:04:57,880 Speaker 1: and T Mobile. Well, it shows that they're going to 94 00:04:58,000 --> 00:05:01,480 Speaker 1: vigorously investigate these deals and and where they truly have concerns, 95 00:05:01,480 --> 00:05:03,840 Speaker 1: they're going to require assets to be sold in order 96 00:05:03,880 --> 00:05:06,160 Speaker 1: to remedy those concerns. I think I think that that 97 00:05:06,240 --> 00:05:08,720 Speaker 1: deal in particular will will have a tough time, and 98 00:05:09,040 --> 00:05:10,680 Speaker 1: I'm not so sure that they're going to be able 99 00:05:10,680 --> 00:05:12,719 Speaker 1: to get get it cleared. They're going to have to 100 00:05:12,720 --> 00:05:14,480 Speaker 1: convince them that what they're going to be able to 101 00:05:14,560 --> 00:05:18,640 Speaker 1: innovate in five g is sort of outweighs the anti 102 00:05:18,640 --> 00:05:21,920 Speaker 1: competitive effect. Let's say that you might get from reducing 103 00:05:21,960 --> 00:05:24,400 Speaker 1: from four big competitors to three in that market, And 104 00:05:24,400 --> 00:05:26,880 Speaker 1: I think that might be a tough argument, and I 105 00:05:26,920 --> 00:05:29,480 Speaker 1: do think they're going to face a pretty tough investigation. 106 00:05:30,279 --> 00:05:35,480 Speaker 1: Jen what other pending deals are looking pretty iffy because 107 00:05:35,520 --> 00:05:38,680 Speaker 1: of the Justice Department's tough stance. Well, you know, it's 108 00:05:38,720 --> 00:05:41,080 Speaker 1: really hard to understand what's going to happen going forward 109 00:05:41,120 --> 00:05:43,320 Speaker 1: with some of these deals that are really just vertical 110 00:05:43,360 --> 00:05:48,560 Speaker 1: in nature, like CBS is deal um expressed express scripts. 111 00:05:48,600 --> 00:05:51,359 Speaker 1: It's hard to say that with sign you know, because 112 00:05:51,440 --> 00:05:54,919 Speaker 1: like I said, historically these deals have had some very 113 00:05:55,040 --> 00:05:58,279 Speaker 1: nice pro competitive aspects to them because it's a vertical 114 00:05:58,320 --> 00:06:01,040 Speaker 1: integration rather than a deal where a competitors being taken 115 00:06:01,080 --> 00:06:04,039 Speaker 1: out of the market um, And they have historically been 116 00:06:04,040 --> 00:06:07,280 Speaker 1: remedied by these behavioral conditions, which I think are more 117 00:06:07,279 --> 00:06:10,680 Speaker 1: palatable in for these companies in a vertical deal than 118 00:06:10,720 --> 00:06:14,159 Speaker 1: selling off assets. And it's hard to understand what will 119 00:06:14,200 --> 00:06:17,080 Speaker 1: happen with those going those sorts of deals going forward 120 00:06:17,160 --> 00:06:20,039 Speaker 1: if in fact, behavioral remedies are off the table. For 121 00:06:20,080 --> 00:06:24,520 Speaker 1: this Department of Justice. And let's turn to a big 122 00:06:24,640 --> 00:06:28,599 Speaker 1: date coming up. That is the decision by the judge 123 00:06:28,600 --> 00:06:31,080 Speaker 1: in the A. T and T Time Warner case. Tell 124 00:06:31,160 --> 00:06:34,159 Speaker 1: us about that, well, we expect that on June twelfth, 125 00:06:34,200 --> 00:06:35,839 Speaker 1: which is sort of a nice treat for the judge 126 00:06:35,880 --> 00:06:38,479 Speaker 1: to tell everybody, Okay, June twelfth is the day I'm 127 00:06:38,480 --> 00:06:40,960 Speaker 1: coming out of this big decision. It's a lot of 128 00:06:40,960 --> 00:06:42,320 Speaker 1: pressure and I think there's gonna be a lot of 129 00:06:42,320 --> 00:06:44,880 Speaker 1: news media descending on the courthouse on that day because 130 00:06:44,920 --> 00:06:46,960 Speaker 1: we don't always know when these decisions are going to 131 00:06:47,040 --> 00:06:50,560 Speaker 1: get publicized. Um, it'll be interesting to see. I suspect 132 00:06:50,600 --> 00:06:53,080 Speaker 1: that if the Department of Justice loses that case, it's 133 00:06:53,160 --> 00:06:55,800 Speaker 1: likely that they will appeal, um and to keep the 134 00:06:55,839 --> 00:06:57,840 Speaker 1: companies from closing, they're going to have to seek an 135 00:06:57,839 --> 00:07:01,320 Speaker 1: emergency injunction just to keep them apart. Are pending the appeal, 136 00:07:01,360 --> 00:07:03,040 Speaker 1: and it's it's if he has to whether they'll win 137 00:07:03,120 --> 00:07:05,599 Speaker 1: that or not. So even if an appeal goes forward, 138 00:07:05,600 --> 00:07:07,920 Speaker 1: it's possible the companies may still be able to close 139 00:07:07,960 --> 00:07:10,600 Speaker 1: if they win. And we do want to hit this 140 00:07:11,080 --> 00:07:15,400 Speaker 1: breaking news that the ABC television network has canceled the 141 00:07:15,600 --> 00:07:18,760 Speaker 1: Rosanne Show. You know that they brought it back, but 142 00:07:18,840 --> 00:07:21,440 Speaker 1: we wanted to mention that because you know, the show 143 00:07:21,560 --> 00:07:24,280 Speaker 1: was right. Yeah, and well it was. There was a 144 00:07:24,280 --> 00:07:27,360 Speaker 1: little controversy surround. There was a little controversy surround, a 145 00:07:27,360 --> 00:07:30,360 Speaker 1: little off topic, I know, but that's a breaking news story. No, 146 00:07:30,480 --> 00:07:33,920 Speaker 1: it's it's it's very interesting. Jen, we're talking. We can 147 00:07:33,960 --> 00:07:35,960 Speaker 1: discuss about ABC, but we don't have time. We can 148 00:07:36,000 --> 00:07:38,440 Speaker 1: discuss about what's happening with that with all the media 149 00:07:39,000 --> 00:07:42,840 Speaker 1: um mergers that are afoot. Thanks so much, Jim. That's 150 00:07:43,240 --> 00:07:47,880 Speaker 1: Bloomberg Intelligence Senior litigation analyst Jennifer Ree. Thanks for listening 151 00:07:47,920 --> 00:07:51,200 Speaker 1: to the Bloomberg Law Podcast. You can subscribe and listen 152 00:07:51,240 --> 00:07:54,800 Speaker 1: to the show on Apple podcast, SoundCloud, and on Bloomberg 153 00:07:54,880 --> 00:07:59,600 Speaker 1: dot com slash podcast. I'm June Basso. This is Bloomberg, 154 00:08:00,040 --> 00:08:03,920 Speaker 1: The Gut, the Junta du Contation.