Monsanto said to make offer for Syngenta, valuing rival at $45B

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LONDON • Monsanto Co. the world’s largest seed company, has made an offer for Syngenta, valuing its Swiss rival at about $45 billion, Bloomberg News reported late Thursday. citing people with knowledge of the matter.

The Creve Coeur-based seed giant is offering about 450 Swiss francs per share, Bloomberg reports, representing a 35 percent premium to Syngenta’s last close.

Syngenta reportedly rejected the offer, but left the door open for another offer, the news service said.

A combination of the two companies, which would create the world’s biggest provider of seeds and crop chemicals, had been the subject of growing speculation in the past two weeks.

Earlier Thursday, Reuters reported that both companies had retained bankers to advise them on the possibility of a takeover.

Syngenta is working with Goldman Sachs, while Monsanto is being advised by Morgan Stanley, the Reuters sources said.

Rumors of talks between the two companies gained momentum at the end of April, sending shares in Syngenta to a record high of 351 Swiss francs on May 4 before easing amid a broad decline in equity markets.

Representatives of Monsanto, Syngenta, Goldman Sachs and Morgan Stanley declined to comment.

Monsanto, which initially approached Syngenta last year, has long been interested in its Swiss rival and the potential to base itself in Switzerland and benefit from lower taxes, one of the sources said.

After attempts by the U.S. Treasury to clamp down on such moves, known as tax inversion, Monsanto may have to buy Syngenta in a cash rather than stock transaction and would be unable to redomicile in Switzerland, an industry source said.

The company, however, might struggle to finance such a deal, which could cost up to $45 billion, and may need to find a partner to take on Syngenta’s U.S. seeds business before launching a takeover bid, another person familiar with industry said.

That the company is expected to face political pressure to remain a U.S. firm became clear Thursday when Sen. Dick Durbin, D-Ill. publicized a letter he sent to Monsanto Chairman and CEO Hugh Grant. In it, Durbin said the company’s “continued commitment to America would be good, not only for the country, but also for Monsanto’s bottom line.”

A company spokeswoman declined to comment on Durbin’s letter.

Lower corporate taxes, however, are not seen as the driving factor

in the deal. Monsanto foresees strong benefits from a takeover of Syngenta, which makes heavy research and development investments in crop technology to increase the average productivity of crops such as corn, soybeans, sugar cane and cereals.

Monsanto, meanwhile, is focused on conventional and biotech seeds and last year raised its R&D spending to $1.7 billion from $1.5 billion in 2013.

“There is a clear strategic logic to a deal,” one of the industry sources said. “Syngenta is the only available target in crop protection. It’s no wonder Monsanto continues to circle the company.”

A deal would come as prospects for genetically modified crops are improving in the European Union after a change in its legislation unlocked a stalled approval process. Monsanto’s genetically modified maize MON810, which has been grown in Spain and Portugal for a decade, is the only GM product approved for cultivation in the EU.

Despite the two companies’ cultural affinity, a merger may be challenged by antitrust regulators, primarily in North America, where the two groups are already seen as market leaders in the seeds industry.

Syngenta would need to go through a portfolio clean-up and carve out its U.S. corn and soybean businesses, said a banker close to other potential bidders weighing their options, hoping to derail a deal that would reshape the industry.


German chemicals company BASF and U.S. petrochemicals group Dow Chemical could be among potential bidders for all or parts of Syngenta, one of the sources said.

He mentioned Chinese state-owned firm, China National Chemical Corp. (ChemChina), as another potential buyer with strong appetite to bulk up its European presence, though Syngenta may be reluctant to cede control to an Asian rival.

“No one wants to make the first move,” the source said. “Everyone is waiting to see the level of the first bid before reacting.”

Syngenta has not been open for any deal, another source said. “ They are a proud Swiss company. They see themselves as market leader and wouldn’t agree to anything without a fight.”

Spokesmen at BASF and Dow Chemical declined to comment, while representatives of ChemChina were not immediately available for comment.

Syngenta, which was formed in 2000 by the merger of Novartis Agribusiness and Zeneca Agrochemicals, also competes with Bayer CropScience and DuPont Pioneer.

The Post-Dispatch and Reuters contributed to this report.


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