WEBVTT - U.S. Regulators Approve Bayer-Monsanto Tie-Up

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcasts. Buyer has won

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<v Speaker 1>antitrust approval from the US for its sixty six billion

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<v Speaker 1>dollar acquisition of mont Santo, removing the last regulatory hurdle

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<v Speaker 1>standing in the way of what will be the world's

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<v Speaker 1>biggest seed in agricultural chemicals company. Speaking with Bloomberg earlier

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<v Speaker 1>this month, Buyer CEO Werner Bauman was confident that regulator

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<v Speaker 1>negotiations in the US and Europe would conclude soon. We

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<v Speaker 1>announced another sale of anti trust assets to BSF and

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<v Speaker 1>with it, I can confirm that we continue to be

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<v Speaker 1>very confident, actually very confident that we are going to

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<v Speaker 1>close this transaction in quarter too. Joining us in our

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<v Speaker 1>New York studios is Jennifer Ree, Bloomberg Intelligence senior litigation analysts.

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<v Speaker 1>Jen what did Buyer have to give up to win

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<v Speaker 1>approval from the US Justice Department, Well, they had to

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<v Speaker 1>give up a lot. I mean, in this case, they're

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<v Speaker 1>selling nine billion dollars worth of assets to be a

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<v Speaker 1>s F. All of it's going to be a s F,

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<v Speaker 1>which is really pretty huge in terms of a divestiture

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<v Speaker 1>package to get a deal through. I mean maybe compared

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<v Speaker 1>to sixty six billion, which is what we see the

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<v Speaker 1>deal is valued at it it doesn't seem so, but

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<v Speaker 1>but it really is very, very big. And this is

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<v Speaker 1>EU and US because a lot of the same assets

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<v Speaker 1>were required to be sold by both jurisdictions with I

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<v Speaker 1>think a few differences at the fringes but um and

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<v Speaker 1>if you added on by the US. But this is really,

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<v Speaker 1>you know, a very large package and including lots of seeds,

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<v Speaker 1>lots of traits, lots of R and D, as well

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<v Speaker 1>as crop protection. So jen there have been several deals

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<v Speaker 1>as we've talked about involving seed and crop chemical firms globally.

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<v Speaker 1>This deal will leave three mega companies and farmers are

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<v Speaker 1>concerned about higher prices and less choice. Does it seem

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<v Speaker 1>as if they have a point? Certainly with the less

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<v Speaker 1>choice they're cutting it down, Well, you know, I think so.

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<v Speaker 1>But the reason for these divestitures and part of the

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<v Speaker 1>reason this is such a huge package all going to

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<v Speaker 1>one entity B A s F is that the idea

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<v Speaker 1>is that the depart that that remedy is meant to

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<v Speaker 1>remedy the harm that could occur. And so at the

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<v Speaker 1>end of the day, you don't really have three big

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<v Speaker 1>integrated agricultural entities left. You really have four, because what

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<v Speaker 1>you're doing is you're turning B A. S F into

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<v Speaker 1>an entity that's very similar to Dowdy Pont, to Kemp,

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<v Speaker 1>China's and Genta and now to Buyer Montsanto. They were

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<v Speaker 1>very active on the chemical side, and the crop protection

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<v Speaker 1>side didn't it didn't have seats. But they're now buying

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<v Speaker 1>a very very large package of seeds as well as

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<v Speaker 1>R and D from Buyer to put them in place

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<v Speaker 1>to compete with the other three entities. And that's the

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<v Speaker 1>purpose of a remedy. Now, so does the merger of

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<v Speaker 1>Buyer and Montsant Monsanto makes send Now with all the

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<v Speaker 1>things that's had to do to satisfy regulators, well, the

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<v Speaker 1>synergies and the competitive advantages still be there, I think. So,

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<v Speaker 1>you know, obviously, if they didn't think at this stage

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<v Speaker 1>that what they're being asked to divest, you know, kills

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<v Speaker 1>their efficiencies and the synergies that they would have gained,

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<v Speaker 1>they likely wouldn't go forward with the deal, you know,

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<v Speaker 1>they would have abandoned it. I think months ago when

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<v Speaker 1>they began to understand exactly what it was going to

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<v Speaker 1>take to try to get this get this through. And

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<v Speaker 1>you know, even though they're selling a lot of buyers seeds,

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<v Speaker 1>you know, they are still getting this combination of Buyers

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<v Speaker 1>chemicals with Monsanto seats, which is really what they wanted,

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<v Speaker 1>Monsanto having the bigger heritage and the seeds and Buyer

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<v Speaker 1>having the bigger heritage on the chemical side. So it

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<v Speaker 1>took about two years for the seal to go through

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<v Speaker 1>almost So what does it signal about the Justice Department

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<v Speaker 1>and its antitrust stanced if anything, that they're willing to

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<v Speaker 1>work with companies or go to court. Has we've seen

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<v Speaker 1>an A T and T time Warner. I you know,

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<v Speaker 1>I don't think it's signal very much. Some of these

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<v Speaker 1>really big and complicated deals have been taking a long time.

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<v Speaker 1>This was about twenty one months, but remember it was

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<v Speaker 1>well underway before the new head of the Antitrust Division

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<v Speaker 1>at the Department of Justice stepped into his position. Um.

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<v Speaker 1>I think one of the things though, it shows is

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<v Speaker 1>that he is standing by some of the statements he

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<v Speaker 1>made earlier this year that he doesn't really believe in

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<v Speaker 1>what we call conductor behavioral remedies because here he saw

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<v Speaker 1>some vertical concerns, and it has been historically the practice

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<v Speaker 1>to remedy a vertical problem with the behavioral with a

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<v Speaker 1>behavioral remedy rather than asset sales. And here this is

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<v Speaker 1>all asset sales. And so he's showing that he he

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<v Speaker 1>means what he says when he says he doesn't like

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<v Speaker 1>the option of a behavioral remedy because he doesn't want

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<v Speaker 1>to have to keep the track. Can we discern any

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<v Speaker 1>clues on what this may mean for future deals such

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<v Speaker 1>a you know that need government approval like uh Sprint

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<v Speaker 1>and T Mobile. Well, it shows that they're going to

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<v Speaker 1>vigorously investigate these deals and and where they truly have concerns,

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<v Speaker 1>they're going to require assets to be sold in order

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<v Speaker 1>to remedy those concerns. I think I think that that

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<v Speaker 1>deal in particular will will have a tough time, and

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<v Speaker 1>I'm not so sure that they're going to be able

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<v Speaker 1>to get get it cleared. They're going to have to

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<v Speaker 1>convince them that what they're going to be able to

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<v Speaker 1>innovate in five g is sort of outweighs the anti

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<v Speaker 1>competitive effect. Let's say that you might get from reducing

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<v Speaker 1>from four big competitors to three in that market, And

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<v Speaker 1>I think that might be a tough argument, and I

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<v Speaker 1>do think they're going to face a pretty tough investigation.

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<v Speaker 1>Jen what other pending deals are looking pretty iffy because

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<v Speaker 1>of the Justice Department's tough stance. Well, you know, it's

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<v Speaker 1>really hard to understand what's going to happen going forward

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<v Speaker 1>with some of these deals that are really just vertical

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<v Speaker 1>in nature, like CBS is deal um expressed express scripts.

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<v Speaker 1>It's hard to say that with sign you know, because

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<v Speaker 1>like I said, historically these deals have had some very

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<v Speaker 1>nice pro competitive aspects to them because it's a vertical

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<v Speaker 1>integration rather than a deal where a competitors being taken

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<v Speaker 1>out of the market um, And they have historically been

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<v Speaker 1>remedied by these behavioral conditions, which I think are more

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<v Speaker 1>palatable in for these companies in a vertical deal than

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<v Speaker 1>selling off assets. And it's hard to understand what will

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<v Speaker 1>happen with those going those sorts of deals going forward

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<v Speaker 1>if in fact, behavioral remedies are off the table. For

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<v Speaker 1>this Department of Justice. And let's turn to a big

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<v Speaker 1>date coming up. That is the decision by the judge

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<v Speaker 1>in the A. T and T Time Warner case. Tell

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<v Speaker 1>us about that, well, we expect that on June twelfth,

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<v Speaker 1>which is sort of a nice treat for the judge

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<v Speaker 1>to tell everybody, Okay, June twelfth is the day I'm

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<v Speaker 1>coming out of this big decision. It's a lot of

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<v Speaker 1>pressure and I think there's gonna be a lot of

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<v Speaker 1>news media descending on the courthouse on that day because

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<v Speaker 1>we don't always know when these decisions are going to

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<v Speaker 1>get publicized. Um, it'll be interesting to see. I suspect

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<v Speaker 1>that if the Department of Justice loses that case, it's

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<v Speaker 1>likely that they will appeal, um and to keep the

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<v Speaker 1>companies from closing, they're going to have to seek an

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<v Speaker 1>emergency injunction just to keep them apart. Are pending the appeal,

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<v Speaker 1>and it's it's if he has to whether they'll win

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<v Speaker 1>that or not. So even if an appeal goes forward,

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<v Speaker 1>it's possible the companies may still be able to close

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<v Speaker 1>if they win. And we do want to hit this

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<v Speaker 1>breaking news that the ABC television network has canceled the

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<v Speaker 1>Rosanne Show. You know that they brought it back, but

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<v Speaker 1>we wanted to mention that because you know, the show

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<v Speaker 1>was right. Yeah, and well it was. There was a

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<v Speaker 1>little controversy surround. There was a little controversy surround, a

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<v Speaker 1>little off topic, I know, but that's a breaking news story. No,

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<v Speaker 1>it's it's it's very interesting. Jen, we're talking. We can

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<v Speaker 1>discuss about ABC, but we don't have time. We can

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<v Speaker 1>discuss about what's happening with that with all the media

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<v Speaker 1>um mergers that are afoot. Thanks so much, Jim. That's

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<v Speaker 1>Bloomberg Intelligence Senior litigation analyst Jennifer Ree. Thanks for listening

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<v Speaker 1>to the Bloomberg Law Podcast. You can subscribe and listen

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<v Speaker 1>to the show on Apple podcast, SoundCloud, and on Bloomberg

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<v Speaker 1>dot com slash podcast. I'm June Basso. This is Bloomberg,

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<v Speaker 1>The Gut, the Junta du Contation.