US
agrochemicals giant Monsanto has dropped its unwelcome takeover bid for Swiss
rival Syngenta. Antitrust concerns were among Syngenta's reasons for rejecting
its American suitor, the company said.
Deutsche Welle, 26 Aug 2015
Monsanto farmer in the US |
Monsanto,
the giant US corporation that produces pesticides and genetically engineered pesticide-resistant seeds, announced Wednesday in New York that it would
discontinue its attempt to take over its Swiss rival Syngenta.
"Without
a basis for constructive engagement from Syngenta, Monsanto will continue to
focus on its growth opportunities built on its existing core business to
deliver the next wave of transformational solutions for agriculture,"
Monsanto said in a statement. It also said it would resume a share buyback
program.
Syngenta
confirmed it had rejected Monsanto's latest and last offer, which
"significantly undervalued [Syngenta] and was fraught with execution
risk."
Monsanto's
most recent bid, proposed August 18, was worth about $46 billion (40 billion
euros). Over the past weeks, Syngenta had repeatedly said it was worried a
merger deal between the two giants would be blocked on antitrust grounds.
Share
turmoil
Monsanto
shared have droped 13 percent between August 18 and 25 amid global market
turmoil. With nearly half Monsanto's takeover offer based on a share swap, the
merger would have entailed significant exposure to market volatility.
Syngenta
said in its statement Wednesday that "recent market volatility" had
"highlighted the significant risk" to Syngenta's shareholders
associated with the proposed merger.
After the
two companies announced merger talks were over, Syngenta shares dropped 18
percent and Monsanto shares jumped by over 8 percent.
Location,
location
Monsanto
had envisioned shifting the merged company's headquarters from Monsanto's
current home base of St Louis, in the midwestern US state of Missouri, to
Britain.
The idea,
according to Monsanto chief executive Hugh Grant in an April 18 letter to
Syngenta executives, was that "our merger will create a new global
enterprise focused on future growth across all geographies... The combination
of our companies would redefine the future of agriculture."
Syngenta
said Monsanto had failed to provide "sufficient clarity" on a number
of concerns, including regulatory risk, the tax consequences of shifting the
company's registered headquarters from the US to Britain, and the estimated
financial benefits of the proposed merger.
"We
engaged with Monsanto in good faith and highlighted those key issues which
required more concrete information in order to continue a dialogue. We take
note of Monsanto's decision," Syngenta chairman Michel Demare said, adding
that "our Board is confident Syngenta's long-term prospects remain very
attractive."
Mergers and
emerging monopolies
Syngenta
was itself formed in 2000 as a result of the merger of Swiss-based Novartis
Agribusiness and UK-based Zeneca Agrochemicals, which were the agrochemical,
seeds and biotech businesses of pharmaceuticals and agrochemical giants
Novartis and Zeneca.
Mergers in
the agrochemicals industry have led to a situation where only six companies
dominate the bulk of global agrochemicals sales, including Syngenta, Bayer
CropScience, BASF, Dow Agrosciences, Monsanto and DuPont.
nz/hg (Reuters, AFP)
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