(Bloomberg) -- Bayer AG and biotech company Ginkgo Bioworks Holdings Inc. will partner to develop products like more environmentally-friendly nitrogen fertilizer and weedkillers. To do that, they'll collaborate on advancing the use of microbes in agriculture.
The move comes as agribusinesses like Bayer try to find alternatives to chemical pesticides and man-made fertilizers, with farmers increasingly under pressure to switch to more sustainable practices. Fertilizer runoff from farms can enter rivers and streams and hurt water quality. At the same time, pests and diseases are becoming more resistant to current synthetic chemicals.
Ginkgo shares rose 4.4% in early trading. The stock has plummeted since going public through a merger with a blank-check company last year, putting pressure on the company to show it can develop lucrative products through its technology to program cells. Bayer shares were little changed in Germany.
As part of the agreement, Ginkgo Bioworks will acquire the team and capabilities of Joyn Bio, a startup that was founded as a joint venture between the two companies, while Bayer will acquire Joyn Bio's product and help bring it to farmers. Joyn Bio uses microbes so that crops like corn can convert nitrogen from the air into a form it can use. Ginkgo Bioworks will also acquire a Bayer research and development site as part of the deal.
Related, from November: Bayer-Backed Startup Opens Crop-Friendly Microbe Greenhouse
The product involves engineering microbes, which can create bigger regulatory hurdles, but ultimately results in a better product, said Bob Reiter, head of research and development for Bayer's Crop Science Division.
“We're trying to build real products that really work all the time,” Reiter said in an interview.
Financial details of the deal weren't disclosed. The companies plan to close the deal by the end of 2022. The transaction is subject to regulatory approvals.
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