June 24, 2015

    
About US$45 billion was offered to Syngenta AG for the latest takeover bid by biotech giant, Monsanto, but the move was once more rejected by the Swiss agribusiness.

According to Micheal Demaré, Syngenta's chairman, the stock-and-cash deal belies the "full and fair" price demanded by "undervaluing" the company's prospects, as well as not comprehending adequately a regulatory process which could last up to a year and a half for the transaction to conclude.

As Syngenta's board unanimously rejected the proposal on grounds of consequential effects on its business, Demaré expressed concerns that the regulatory process will not bode well for its global marketing of "integrated" offerings to farmers.

"Monsanto has endorsed our strategy and has clearly demonstrated that it has great value," Demaré said in a video interview. "The only thing is they're trying (is) to buy it on the cheap."

Syngenta is still open to future proposals which, however, must meet conditions set by the company.

"(The deal) has to recognise for shareholders the inherent combination benefits. And it has to provide a high degree of certainty that the transaction will be closed, including compensation in case the deal fails," Demaré stated. Even without Monsanto, the chairman is optimistic that Syngenta's profit margins could expand independently.

Despite efforts by Monsanto executives in convincing Syngenta's European shareholders about accepting the deal, the chairman claimed that the company has not faced significant pressure to enter into negotiations.

"Without an improved offer, the board and management will not engage in any high-level talks with Monsanto," Patrick Rafaisz, a Vontobel analyst, observed.

Still, Monsanto could consider a higher offer if it is granted access to confidential information concerning earnings potential through a due diligence process. This proposal was also turned down by Syngenta.

An earlier rejection of Monsanto's offering happened in mid-April when Syngenta refused an amount of US$484 per company share. A later version included a US$2 billion breakup fee - in the event of the deal's collapse due to regulatory disapproval - which Demaré chided for being insufficient to mitigate impacts on business.

Not surprisingly, Monsanto is seemingly losing patience over the stagnating Syngenta deal. A spokeswoman for the company expressed disappointment over Syngenta's unwillingness for "constructive and direct dialogue with any stakeholders, including with Monsanto".

Moreover, Monsanto may turn its sights on other potential deals, including an interest in acquiring Bayer AG's crop chemicals business, according to Brett Begemann, the chief operating officer of Monsanto.

"We won't stay at (the Syngenta deal) forever," Begemann said despite the company's continual eagerness for the deal to come to fruition.

However, Bayer is not planning to sell its crop chemicals business, Marijn Dekkers, the CEO of the company, said.