Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Buyer has won
Speaker 1: antitrust approval from the US for its sixty six billion
Speaker 1: dollar acquisition of mont Santo, removing the last regulatory hurdle
Speaker 1: standing in the way of what will be the world's
Speaker 1: biggest seed in agricultural chemicals company. Speaking with Bloomberg earlier
Speaker 1: this month, Buyer CEO Werner Bauman was confident that regulator
Speaker 1: negotiations in the US and Europe would conclude soon. We
Speaker 1: announced another sale of anti trust assets to BSF and
Speaker 1: with it, I can confirm that we continue to be
Speaker 1: very confident, actually very confident that we are going to
Speaker 1: close this transaction in quarter too. Joining us in our
Speaker 1: New York studios is Jennifer Ree, Bloomberg Intelligence senior litigation analysts.
Speaker 1: Jen what did Buyer have to give up to win
Speaker 1: approval from the US Justice Department, Well, they had to
Speaker 1: give up a lot. I mean, in this case, they're
Speaker 1: selling nine billion dollars worth of assets to be a
Speaker 1: s F. All of it's going to be a s F,
Speaker 1: which is really pretty huge in terms of a divestiture
Speaker 1: package to get a deal through. I mean maybe compared
Speaker 1: to sixty six billion, which is what we see the
Speaker 1: deal is valued at it it doesn't seem so, but
Speaker 1: but it really is very, very big. And this is
Speaker 1: EU and US because a lot of the same assets
Speaker 1: were required to be sold by both jurisdictions with I
Speaker 1: think a few differences at the fringes but um and
Speaker 1: if you added on by the US. But this is really,
Speaker 1: you know, a very large package and including lots of seeds,
Speaker 1: lots of traits, lots of R and D, as well
Speaker 1: as crop protection. So jen there have been several deals
Speaker 1: as we've talked about involving seed and crop chemical firms globally.
Speaker 1: This deal will leave three mega companies and farmers are
Speaker 1: concerned about higher prices and less choice. Does it seem
Speaker 1: as if they have a point? Certainly with the less
Speaker 1: choice they're cutting it down, Well, you know, I think so.
Speaker 1: But the reason for these divestitures and part of the
Speaker 1: reason this is such a huge package all going to
Speaker 1: one entity B A s F is that the idea
Speaker 1: is that the depart that that remedy is meant to
Speaker 1: remedy the harm that could occur. And so at the
Speaker 1: end of the day, you don't really have three big
Speaker 1: integrated agricultural entities left. You really have four, because what
Speaker 1: you're doing is you're turning B A. S F into
Speaker 1: an entity that's very similar to Dowdy Pont, to Kemp,
Speaker 1: China's and Genta and now to Buyer Montsanto. They were
Speaker 1: very active on the chemical side, and the crop protection
Speaker 1: side didn't it didn't have seats. But they're now buying
Speaker 1: a very very large package of seeds as well as
Speaker 1: R and D from Buyer to put them in place
Speaker 1: to compete with the other three entities. And that's the
Speaker 1: purpose of a remedy. Now, so does the merger of
Speaker 1: Buyer and Montsant Monsanto makes send Now with all the
Speaker 1: things that's had to do to satisfy regulators, well, the
Speaker 1: synergies and the competitive advantages still be there, I think. So,
Speaker 1: you know, obviously, if they didn't think at this stage
Speaker 1: that what they're being asked to divest, you know, kills
Speaker 1: their efficiencies and the synergies that they would have gained,
Speaker 1: they likely wouldn't go forward with the deal, you know,
Speaker 1: they would have abandoned it. I think months ago when
Speaker 1: they began to understand exactly what it was going to
Speaker 1: take to try to get this get this through. And
Speaker 1: you know, even though they're selling a lot of buyers seeds,
Speaker 1: you know, they are still getting this combination of Buyers
Speaker 1: chemicals with Monsanto seats, which is really what they wanted,
Speaker 1: Monsanto having the bigger heritage and the seeds and Buyer
Speaker 1: having the bigger heritage on the chemical side. So it
Speaker 1: took about two years for the seal to go through
Speaker 1: almost So what does it signal about the Justice Department
Speaker 1: and its antitrust stanced if anything, that they're willing to
Speaker 1: work with companies or go to court. Has we've seen
Speaker 1: an A T and T time Warner. I you know,
Speaker 1: I don't think it's signal very much. Some of these
Speaker 1: really big and complicated deals have been taking a long time.
Speaker 1: This was about twenty one months, but remember it was
Speaker 1: well underway before the new head of the Antitrust Division
Speaker 1: at the Department of Justice stepped into his position. Um.
Speaker 1: I think one of the things though, it shows is
Speaker 1: that he is standing by some of the statements he
Speaker 1: made earlier this year that he doesn't really believe in
Speaker 1: what we call conductor behavioral remedies because here he saw
Speaker 1: some vertical concerns, and it has been historically the practice
Speaker 1: to remedy a vertical problem with the behavioral with a
Speaker 1: behavioral remedy rather than asset sales. And here this is
Speaker 1: all asset sales. And so he's showing that he he
Speaker 1: means what he says when he says he doesn't like
Speaker 1: the option of a behavioral remedy because he doesn't want
Speaker 1: to have to keep the track. Can we discern any
Speaker 1: clues on what this may mean for future deals such
Speaker 1: a you know that need government approval like uh Sprint
Speaker 1: and T Mobile. Well, it shows that they're going to
Speaker 1: vigorously investigate these deals and and where they truly have concerns,
Speaker 1: they're going to require assets to be sold in order
Speaker 1: to remedy those concerns. I think I think that that
Speaker 1: deal in particular will will have a tough time, and
Speaker 1: I'm not so sure that they're going to be able
Speaker 1: to get get it cleared. They're going to have to
Speaker 1: convince them that what they're going to be able to
Speaker 1: innovate in five g is sort of outweighs the anti
Speaker 1: competitive effect. Let's say that you might get from reducing
Speaker 1: from four big competitors to three in that market, And
Speaker 1: I think that might be a tough argument, and I
Speaker 1: do think they're going to face a pretty tough investigation.
Speaker 1: Jen what other pending deals are looking pretty iffy because
Speaker 1: of the Justice Department's tough stance. Well, you know, it's
Speaker 1: really hard to understand what's going to happen going forward
Speaker 1: with some of these deals that are really just vertical
Speaker 1: in nature, like CBS is deal um expressed express scripts.
Speaker 1: It's hard to say that with sign you know, because
Speaker 1: like I said, historically these deals have had some very
Speaker 1: nice pro competitive aspects to them because it's a vertical
Speaker 1: integration rather than a deal where a competitors being taken
Speaker 1: out of the market um, And they have historically been
Speaker 1: remedied by these behavioral conditions, which I think are more
Speaker 1: palatable in for these companies in a vertical deal than
Speaker 1: selling off assets. And it's hard to understand what will
Speaker 1: happen with those going those sorts of deals going forward
Speaker 1: if in fact, behavioral remedies are off the table. For
Speaker 1: this Department of Justice. And let's turn to a big
Speaker 1: date coming up. That is the decision by the judge
Speaker 1: in the A. T and T Time Warner case. Tell
Speaker 1: us about that, well, we expect that on June twelfth,
Speaker 1: which is sort of a nice treat for the judge
Speaker 1: to tell everybody, Okay, June twelfth is the day I'm
Speaker 1: coming out of this big decision. It's a lot of
Speaker 1: pressure and I think there's gonna be a lot of
Speaker 1: news media descending on the courthouse on that day because
Speaker 1: we don't always know when these decisions are going to
Speaker 1: get publicized. Um, it'll be interesting to see. I suspect
Speaker 1: that if the Department of Justice loses that case, it's
Speaker 1: likely that they will appeal, um and to keep the
Speaker 1: companies from closing, they're going to have to seek an
Speaker 1: emergency injunction just to keep them apart. Are pending the appeal,
Speaker 1: and it's it's if he has to whether they'll win
Speaker 1: that or not. So even if an appeal goes forward,
Speaker 1: it's possible the companies may still be able to close
Speaker 1: if they win. And we do want to hit this
Speaker 1: breaking news that the ABC television network has canceled the
Speaker 1: Rosanne Show. You know that they brought it back, but
Speaker 1: we wanted to mention that because you know, the show
Speaker 1: was right. Yeah, and well it was. There was a
Speaker 1: little controversy surround. There was a little controversy surround, a
Speaker 1: little off topic, I know, but that's a breaking news story. No,
Speaker 1: it's it's it's very interesting. Jen, we're talking. We can
Speaker 1: discuss about ABC, but we don't have time. We can
Speaker 1: discuss about what's happening with that with all the media
Speaker 1: um mergers that are afoot. Thanks so much, Jim. That's
Speaker 1: Bloomberg Intelligence Senior litigation analyst Jennifer Ree. Thanks for listening
Speaker 1: to the Bloomberg Law Podcast. You can subscribe and listen
Speaker 1: to the show on Apple podcast, SoundCloud, and on Bloomberg
Speaker 1: dot com slash podcast. I'm June Basso. This is Bloomberg,
Speaker 1: The Gut, the Junta du Contation.