The US Department of Justice (DOJ) is to allow Bayer’s a $62.5 billion deal to acquire Monsanto, according to Dow Jones sources. The acquisition was held up by lack of agreement, but the DOJ decision brings agreement in principle after a meeting between Bayer CEO Werner Bauman, Monsanto CEO Hugh Grant, and DOJ officials. The two companies pledged to sell further assets in order to win government approval.

Defending US farmers

Bayer had won EU antitrust approval on March 21 for the deal, conditional on the divestiture of an extensive remedy package, which addresses the parties' overlaps in seeds, pesticides and digital agriculture. However, US officials subsequently expressed concern that a combination would disadvantage American farmers. The use of genetically modified seeds by US farmers would leave them unable to compete with their European counterparts, where use of genetically modified seeds is banned. Bayer will divest business assets related to seed treatment, as well as give up ownership of parts of its digital agriculture business.

Weak farm economy

The deal will create a company with a share of more than a quarter of the world’s seed and pesticides market. A weakening global farm economy has led to consolidation among the major players, bringing protests from environmental and farming groups. Bayer has declined comment on the report, but Dow Jones reports a statement that Bayer anticipated closing the Monsanto purchase in the second quarter.