Syngenta Rejects Monsanto Takeover Bid
11 May 2015 --- The world’s third largest crop protection company Syngenta has rejected outright a bid by world seeds leader Monsanto to buy the company, stating that its board of directors has unanimously determined to reject Monsanto’s proposal as it is not in the best interests of Syngenta, its shareholders and its stakeholders.
Analysts have commented that Monsanto’s offer, worth around €41bn, takes advantage of Syngenta’s precarious position, currently overshadowed by weak crop prices and adverse currency effects. Syngenta, however, could hold out for more, given that Monsanto sees great advantages in combining Syngenta’s crop protection expertise with its own business.
Michel Demaré, Syngenta Chairman said, “Syngenta is the world leader in Crop Protection, the number three in Seeds and the first company to introduce integrated solutions for growers. Monsanto’s proposal does not reflect the outstanding growth prospects of Syngenta’s integrated strategy and the significant future value potential of the company’s crop-focused innovation and market leading positions.
“While Syngenta’s valuation is currently affected by short term currency and commodity price movements, the business outlook is strong, with emerging markets accounting for over 50% of our sales. Our integrated strategy has been particularly successful in these markets which in 2014 registered double digit growth rates for the fifth consecutive year, and which represent a major part of the future growth potential for our industry. Recently launched new products are achieving rapid sales growth globally as growers demand the latest technologies, and we have a strong pipeline of innovative crop protection products in development, which have total peak sales potential of over $3 billion,” Demaré said.
Monsanto confirmed that is has made an offer for Syngenta. In a statement, the company, which supplies seeds to a significant amount of farmers worldwide, including genetically modified options, confirmed that it had made a private proposal to Syngenta`s Board of Directors to acquire Syngenta for 449.00 CHF per share. It said that the proposal contemplates consideration of approximately 45% cash and would provide Syngenta shareholders with a very attractive premium and significant further value creation through ongoing ownership in the combined company.
“Monsanto has long respected and followed Syngenta`s business and believes combining the two companies would deliver significant value to all stakeholders, including shareholders. Creating a new company from the combination of Syngenta`s strengths and leadership in crop protection chemicals and Monsanto`s leadership in seeds, traits and information technology would form an integrated global leader in agriculture with comprehensive and complementary product portfolios, and an Ag-focused organization with enhanced abilities to develop and accelerate innovative solutions for growers. Monsanto believes the combined company would be uniquely positioned to deliver a comprehensive suite of integrated solutions to farmers around the world and to accelerate technological innovation through precision agriculture and advanced research and development capabilities aimed at increasing the world`s food supply in a sustainable fashion.”
Whilst Syngenta has rejected this initial offer, it is unlikely that we have heard the last of this deal.
