The European Commission (EC) on Wednesday conditionally approved Germany-based Bayer's proposed US$62.5 billion takeover of U.S. seed company Monsanto (NYSE:MON). 

The merger would create the world’s largest integrated pesticide and seeds company. The EC had opened an in-depth investigation into the issue under EU Merger Regulation. 

"Receipt of the European Commission's approval is a major success and a significant milestone," said Bayer CEO Werner Baumann.

"Together with Monsanto, we want to help farmers across the world grow more nutritious food in a more sustainable way that benefits both consumers and the environment."

Bayer said it has now received approvals for the transaction from substantially more than half of the some 30 regulatory authorities, including those in Brazil and China.

The conditions cover in particular the divestment of certain Bayer businesses, including the global field crop seeds business such as canola, cotton, and soybean (with minor exceptions restricted to the Asia region), the R&D platform for hybrid wheat, the global vegetable seeds business, the global glufosinate ammonium business as well as certain glyphosate-based herbicides in Europe, predominantly for industrial use.

In addition, Monsanto's global business with the nematicide NemaStrike must be divested. The conditions also stipulate the transfer of three Bayer research projects in the area of non-selective herbicides and the granting of a license to Bayer's digital farming portfolio. 

BASF is the intended purchaser of these assets.

The transaction remains subject to customary closing conditions, including receipt of required regulatory approvals. Bayer and Monsanto are working closely with the authorities - including the Department of Justice in the United States - with the goal of closing the transaction in the second quarter of 2018.

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