Bayer, Aventis Deal Gets European Approval

LEVERKUSEN, Germany — The European Union Commission cleared Bayer AG's 7.25-billion euro takeover of Aventis SA's agrochemical unit April 17, pending "substantial divestitures" by Bayer, including the company’s concession to sell to a single purchaser a group of Aventis insecticides and fungicides, most notablly fipronil, its new insecticide.

Under the agreement, Bayer will divest fipronil for seed treatment (agricultural) uses. However, Bayer will retain fipronil for all other environmental science uses, including lawn care and structural pest control, according to Bayer Spokesman Guenter Forneck. Fipronil is the active ingredient in Aventis’ insecticide TopChoice.

Currently, Bayer, Aventis and Syngenta Professional Products are the major players in the seed treatment sector. Forneck said the E.U. Commission was concerned that Bayer’s acquisition of Aventis would lead to market dominance in this sector by Bayer and Syngenta. Forneck acknowledged that Bayer had hoped to complete the merger without having to divest any products, but the company made the concession to gain E.U. Commission clearance.

“We had hoped to have all products in hand, but the E.U. Commission argued that there should be or ought to be a new competitor so that at least three strong competitors are in the market,” Forneck told Lawn & Landscape magazine. “This was the solution that was chosen.”

Forneck said the list of conditions set down by the E.U. Commission relates to total product sales of 600 million euros (about $580 million).

The planned merger still requires the approval of U.S. antitrust authorities, and Forneck said Bayer expects clearance from the U.S. Federal Trade Commission (FTC) in the immediate future. Still to be determined is the future of Bayer’s imidacloprid, the active ingredient in the company’s widely used insecticide Merit. Since Bayer will be able to retain fipronil for lawn care uses, many market analysts believe the company will have to license out imidacloprid for the FTC to approve the merger.

Forneck added that Bayer expects there to be high interest among chemical manufacturers interested in purchasing fipronil for seed treatment uses.

“This is one of the last chances for a manufacturer to add external growth to its own portfolio,” Forneck said. “It is valuable for all the other companies.”

Forneck would not speculate on leading candidates to buy fipronil, but he did confirm that BASF has shown interest.