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Monsanto still pursuing a bid for Syngenta

 

 

By JIM RUTLEDGE

D.C. Correspondent

 

NEW YORK, N.Y. — Despite being rejected in its $45 billion takeover bid to acquire Swiss seed giant rival Syngenta, Monsanto Co. told investors May 20 it will continue to pursue a deal – and, if it succeeds, would sell Syngenta’s seeds and crop genetics to win regulatory approval with stiff scrutiny expected from antitrust regulators in both countries.

Brett Begemann, Monsanto’s president and chief operating officer, told two groups of Wall Street investors that by "adding Syngenta’s leading crop protection portfolio to Monsanto’s leading seed footprint," the combined company would create a giant in global agricultural biotechnology and "create new value for farmers," redefining "the future of agriculture in the world.

"Farmers need new innovations," Begemann stressed, in remarks gleaned from an audio recording of his conference with investors. "We’re very bullish on a new hybrid of corn," projecting to produce "900 million bushels of corn, up from 500 (million) to 600 million," this year.

In Washington, D.C., for the National Farmers Union (NFU), representing 200,000 families across the country, President Roger Johnson said he was skeptical such a deal "would be in the best interest of America’s family farmers."

"Clearly, seed, chemical and technology-driven improvements will be an important component to the future of American agriculture, but less competition in the marketplace will place family farmers and ranchers at an increasing disadvantage," he said in an email statement.

"The National Farmers Union has worked for over a century to push for fair competition in the marketplace. Over that time period agriculture has become more concentrated, leaving farmers with fewer choices for both buying imports and selling their produce."

St. Louis-based Monsanto is the No. 1 company worldwide in seed sales, and Syngenta ranks third and is also the world leader in products to protect crops. When Monsanto made its May 8 bid, Syngenta officials said in a public statement the offer "undervalued its prospects" and that "concluding such a deal would face stiff regulatory scrutiny."

"We intend to make this a really clean deal," Begemann said, "This is really easy to get done. We made an offer. They rejected that offer. We will continue to talk with them and see where we move this along to."

Monsanto’s plan, he outlined, would be to divest itself of Syngenta’s seed business. The proceeds from the planned divestitures, which would cover all of the company’s seeds and trait assets and some of its crop chemicals, would generate cash to "allow the two companies to have a responsible capital structure."

If Syngenta continues to reject the deal, Begemann said, Monsanto will seek to develop relationships with other chemical suppliers.

During the company’s investor presentations, stock market shares for Syngenta rose to 4.4 percent and closed at $91.06 a share on May 20. Monsanto shares, on the other hand, sank $1.14, or 1 percent, to close at $118.77. The businesses overlap in seeds for corn, vegetables and other crops.

If the acquisition deal is approved, it would be the largest merger in agribusiness history, creating the largest provider of seed and pest control products, including Monsanto’s hugely successful agricultural herbicide Roundup, according to Dealogic. A new company would have the ability to increase sales of genetically modified soybean, corn and cotton seeds.

Begemann stressed by acquiring Syngenta, Monsanto would have the added ability to sell products to farms around the world in areas where Monsanto can’t reach, such as parts of Africa and Asia. Approximately 75 percent of Syngenta’s $15 billion in sales last year came from pesticides and the rest from seeds. Monsanto earned about a third of its $16 billion in 2014 sales from seeds and pesticides, mostly from the weed-killer Roundup, and licensing plant genetics to rivals.

Media reports and data firms Nielsen NV and BMO Capital Markets said Monsanto’s global market share in seeds is about 33 percent and Syngenta’s is estimated at 10 percent. Together, the two companies control about 40 percent of U.S. corn seed. If Monsanto succeeds, the two would have a combined market share of $96.6 billion, Wall Street investors said on news of Monsanto’s May 8 bid. In 2014, the companies generated 30 percent of the world’s $57 billion pesticide business, reports claim.

U.S. corn growers last year planted about 11.5 million acres of Monsanto’s new Genuity DroughtGard hybrid combined with Syngenta’s Agrisure Artesian and DuPont’s Pioneer Optimum AQUAmax in expanded seed technology, designed to minimize the effects of drought and capitalize on available water to produce higher corn yields.

5/27/2015