Dow Chemical and DuPont gained conditional EU antitrust approval on Monday for their $130 billion merger by agreeing to significant asset sales, one of a trio of mega mergers that will redraw the agrochemicals industry.
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The European Commission had been concerned that the merger of two of the biggest and oldest U.S. chemical producers would have few incentives to produce new herbicides and pesticides in the future.
It said the asset sales would ensure competition in the sector and benefit European farmers and consumers.
"We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment," European Competition Commissioner Margrethe Vestager said in a statement.
"Our decision today ensures that the merger between Dow and DuPont does not reduce price competition for existing pesticides or innovation for safer and better products in the future."
In return for the EU green light, DuPont will divest large parts of its global pesticides business, including its global research and development organization.
Dow in turn will sell two acid co-polymer manufacturing facilities in Spain and the United States, as well as a contract with a third party through which it buys ionomers. The company has already found a buyer South Korea's SK Innovation.
Antitrust experts said regulator's demand to sell large swatches of R&D facilities could set the benchmark for future deals.
Sources said last week that ChemChina's $43 billion bid for Syngenta could be approved this week but the timing could slip. Bayer and Monsanto are set to ask for EU approval in the coming months.
(Reporting by Foo Yun Chee, editing by Robin Emmott)