Syngenta rejects Monsanto’s $47-bn takeover offer

Global Swiss agribusiness and genomic research major Syngenta has rejected a $47-billion takeover offer from US agrochemical and agri-biotech corporation Monsanto as the board felt it ''significantly undervalued the company and was fraught with execution risk.''

According to a regulatory filing yesterday, the bid was turned down unanimously as the board thought it had not been given enough clarity on Monsanto's estimate of total cost and revenue synergies; assumptions regarding net sales proceeds of seeds and traits; the nature and extent of regulatory covenants that it was prepared to offer; and assessment of risks and benefits from Monsanto relocating its legal headquarters to the UK.

''We engaged with Monsanto in good faith and highlighted those key issues which required more concrete information in order to continue a dialogue,'' said Michel Demaré, chairman of Syngenta.

''We take note of Monsanto's decision. Our Board is confident that Syngenta's long-term prospects remain very attractive with a leading portfolio and a promising pipeline of new products and technologies. We are committed to accelerate shareholder value creation.''

The most recent bid reportedly contained a higher proportion of cash than the earlier bid, comprising 45 per cent cash to 55 per cent Monsanto shares. It also came with a breakup fee of $3 billion, up from $2 billion.

Giving up on the effort, Monsanto's management declared in a statement that it would instead "focus on its growth opportunities built on its existing core business to deliver the next wave of transformational solutions for agriculture."

However, according to commentators,  Monsanto might be only pausing, not fully giving up its buyout push.

According to the company's statement it was "no longer pursuing [the] current proposal" for acquiring its rival. It added that the combination "would have created tremendous value for shareowners of both companies and farmers."

According to Dow Jones' Jacob Bunge, Monsanto CEO Hugh Grant had had Syngenta in his sights since at least 2011, and said in a June interview that he viewed the effort as a long game.

According to commentators, Monsanto wanted to diversify away from its reliance on seeds  by buying Syngenta, the world's biggest purveyor of pesticides.

Rejecting a fresh takeover approach by Monsanto in June, Syngenta said the US company had failed to convince it of the merits of a merger and was only repeating the ''same indequate price'' with the same flawed view of the execution risks. (See: Syngenta rejects fresh takeover approach by Monsanto).