German pharmaceutical company, Bayer has agreed to sell off its agricultural businesses and other assets, totaling about $9 billion to German chemical company BASF, just head of its $66 billion takeover of Monsanto (NYSE: MON), announced the Justice Department on Tuesday.
The deal is "the largest divestiture ever required by the United States in a merger enforcement proceeding," said Antitrust Division Chief Makan Delrahim.
Bayer is buying Monsanto at a desperate time for American farmers. U.S. farm profits fell to $61 billion in 2016, marking the lowest since 2006, and less than half the income farms earned in 2013, according to CNN.
Bayer will divest its seed businesses, cotton, canola and soybean segments, including its Liberty herbicide business, which all directly compete with Monsanto’s products.
“The proposed divestiture to BASF, an experienced chemical company with a substantial crop protection business, will fully resolve all horizontal and vertical competition concerns. As a result, American farmers and consumers will continue to benefit from competition in this industry.” said the Department of Justice.
The merger was first announced in 2016, but the DOJ’s antitrust division put the deal on hold and investigated the matter over concerns that it would drive seed prices up.
The DOJ said without Bayer’s selloff, the merger would “likely result in higher prices, lower quality, and fewer choices across a wide array of seed and crop protection products.”
Bayer is still awaiting approval from regulators from Canada and Mexico. The company has until June 14 to close its acquisition for Monsanto, or after that, Monsanto has the right to withdraw from the deal or ask for a higher bid.