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Bloomberg's Rie on Antitrust Issues For Bayer-Monsanto (Audio) · Bloomberg Intelligence

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  Speaker 1: over your Bloomberg type squawk escue you a w K
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  Speaker 1: You're listening to taking stock with pin Box and Kathleen
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  Speaker 1: has on Bloomberg Radio. Monsanto may have initially rejected buyers
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  Speaker 1: sixty two billion dollar takeover bid. Bloomberg First Word reporting
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  Speaker 1: that Street Insiders says they are ready to raise their
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  Speaker 1: bid to a dollar thirty five or excuse me, a
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  Speaker 1: hundred hundred thirty five share. Excuse me, got my decimal
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  Speaker 1: point in the wrong place. That's where the focus has
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  Speaker 1: been a lot on on when it comes to Wall
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  Speaker 1: Street in analysts. But our next guest is looking at
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  Speaker 1: a very important part of this, and that's the rigorous
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  Speaker 1: review by anti trust regulators that buyer will face in
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  Speaker 1: multiple jurisdictions around the world. What does this mean for
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  Speaker 1: the deal? Jennifer Jennifer rehe Is. Here's he's senior litigation
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  Speaker 1: analysts for Bloomberg Intelligence and she's joining us in our
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  Speaker 1: New York studio. Welcome, Jennifer, Thank you so much for
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  Speaker 1: having me. So again, let's put all that price stuff,
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  Speaker 1: because if they really want to do this, they're going
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  Speaker 1: to come to a price, right. The question is that's
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  Speaker 1: just one step then have to get past the regulatars.
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  Speaker 1: What's the biggest issue on that those regulators minds? You know,
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  Speaker 1: I think the biggest issue is that we're looking at
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  Speaker 1: a lot of concentration in what you might want to call,
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  Speaker 1: you know, agricultural or chemical areas, so you know, three
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  Speaker 1: different deals that are ongoing at the same time that
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  Speaker 1: are all global in nature, that deal with various crop
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  Speaker 1: protection chemicals and with seeds, and there's a lot of
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  Speaker 1: nervousness about the way the regulators are going to view
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  Speaker 1: these deals, given what they've done with Haliburton and Baker
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  Speaker 1: Hughes and a few other deals in the past. Um
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  Speaker 1: and whether this might be deemed too much concentration. Now
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  Speaker 1: here's a quote, and I'd like your thoughts and maybe
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  Speaker 1: you can figure out exactly what this would mean for
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  Speaker 1: people that are involved in the legal issues of this
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  Speaker 1: potential combination. This is coming from Robert Lawrence. He's a
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  Speaker 1: Johns Hopkins School of Medicine professors, also the founding director
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  Speaker 1: of the Center for a Livable Future. He says, the
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  Speaker 1: fact is we went from having probably thirty to forty
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  Speaker 1: varieties of soybeans to now having one variety making up
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  Speaker 1: nearly all of US soybean production. So as set aside
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  Speaker 1: the business aspect of what this means for farmers, but
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  Speaker 1: just in terms of having to only rely on one variety, well,
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  Speaker 1: you know the fact that that might have happened, you know,
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  Speaker 1: we have to understand why that happened and how that
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  Speaker 1: came about. If that happened due to increased concentration and
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  Speaker 1: less competition. It's one thing, but the anti trust laws
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  Speaker 1: will focus on increased competion, competition, but a decrease in competition,
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  Speaker 1: less innovation, and less choice from mergers. So they'll look
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  Speaker 1: at the effect of these deals and whether these deals
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  Speaker 1: may continue to contribute to that. They may not look at,
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  Speaker 1: you know, they'll look the way things stand today, but
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  Speaker 1: they look at will it for will they further contribute
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  Speaker 1: and if in fact it will, is there something can
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  Speaker 1: that can be done? Are there concessions or divestitures or
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  Speaker 1: let's say, changes the licenses that can be agreed to
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  Speaker 1: in order to allow these deals to go forward and
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  Speaker 1: perhaps fix that problem going forward? So is it give
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  Speaker 1: us just a sense of do there are the issues
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  Speaker 1: pretty much the same among antitrust regulators around the world.
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  Speaker 1: If you go from the US to Germany to gosh,
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  Speaker 1: you know, Japan, is it different? It is different? You know,
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  Speaker 1: there are many many similarities, but there are also differences.
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  Speaker 1: And to start with in this industry, what we've seen
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  Speaker 1: so far historically is that these regulators will look at
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  Speaker 1: the effect on in this area country by country and
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  Speaker 1: not necessarily globally. So, for instance, if the European regulators
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  Speaker 1: are looking at how it affects competition European Union wide
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  Speaker 1: or country by country within Europe, that's going to be
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  Speaker 1: different than the way the U S regulators may look
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  Speaker 1: at it, who are focusing on how does it affect
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  Speaker 1: the United States UH and China, which might be asking
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  Speaker 1: how does this affect China. There are times when the
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  Speaker 1: regulators will say, this is a global market, how does
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  Speaker 1: it affect the world the globally? But in this area,
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  Speaker 1: at least in the past, historically they have looked at
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  Speaker 1: the areas when they've assessed past deals country by country. Well,
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  Speaker 1: just to just to sort of underscore your point about
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  Speaker 1: this consolidation, we're talking about Dow Chemical and DuPont combining,
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  Speaker 1: then c Genta, and then you've got the Chinese state
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  Speaker 1: owned company KEM China KIM China, right, So a real
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  Speaker 1: concentration in this particular industry group. Right. But again, the regulators,
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  Speaker 1: the first thing they ask is where do these companies
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  Speaker 1: compete in terms of products and services? And where do
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  Speaker 1: they compete geographically? And that's the starting point and you
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  Speaker 1: have to ask that. And when you ask that, and
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  Speaker 1: you start to look at these deals, you realize, okay, well,
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  Speaker 1: KEM China and cin Ginda don't necessarily overlap in every
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  Speaker 1: country in the US, and for every product, they don't
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  Speaker 1: necessarily compete everywhere. And the same thing could be true.
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  Speaker 1: Let's say for seeds. You know you have buyer that
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  Speaker 1: isn't so big in seeds and bigger and crop protection
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  Speaker 1: and and and more complementary perhaps to mind Santo, and
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  Speaker 1: you've got to kind of dig into that nitty gritty
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  Speaker 1: to understand where the competition issues are going to lie.
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  Speaker 1: I would imagine they're also going to have to learn
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  Speaker 1: about the diseases that might affect No, seriously, that might
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  Speaker 1: affect some of these crops, because if you're only depending
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  Speaker 1: on one variety, then it doesn't matter what if did
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  Speaker 1: the business. It will devastate the agricultural community. Absolutely. You know,
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  Speaker 1: they dig in hard, these regulators. That's why these things
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  Speaker 1: taken here. They look at everything. Yes, or notice, let's
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  Speaker 1: go through the steel. Do they make it past just
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  Speaker 1: I think yes, with with some concessions. I'm thank you
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  Speaker 1: very much for coming in and spending time with us.
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  Speaker 1: Jennifer Rees, senior litigation analysts for Bloomberg Intelligence. Shares of
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  Speaker 1: Monsanto they are up about two and a half percent
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  Speaker 1: right now, and shares of Buyer down about one percent.
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