Monsanto abandoned efforts to acquire Syngenta after the Swiss pesticide maker snubbed a sweetened bid of about $46.2 billion, scuttling what would have been one of the largest purchases of a European company by a U.S. rival.
Syngenta’s shares plunged by a record 18 per cent, and Monsanto’s stock rose the most in six years. Monsanto disclosed Wednesday that it raised its cash-and-stock offer to 470 Swiss francs a share from 449 francs. Syngenta, in rejecting the bid, said the value had dropped to 433 francs following the recent global market rout.
This is the third time since 2011 that Monsanto chairman and chief executive officer Hugh Grant tried and failed to buy Syngenta and create the largest global producer of seeds and crop chemicals. Syngenta said Monsanto neglected to recognize fully both its prospects and the threat of antitrust hurdles. It now risks incurring the wrath of shareholders courted by Monsanto.
“Although we had no issue with Monsanto acquiring parts of Syngenta, we believed the regulatory issues would have been difficult to overcome,” Keith Carpenter, a Toronto-based analyst at Canaccord Genuity who recommends buying Monsanto shares, said in a note.
The latest bid increased the cash component to 245 francs. It also raised the reverse breakup fee to be paid to $3 billion from $2 billion, to be paid if regulators had rejected the combination, St. Louis-based Monsanto said in a statement.
The offer undervalued the company and “was fraught with execution risk,” Syngenta said in a separate statement. Recent declines in equity markets “highlighted the significant risk to shareholders” in the stock component of the transaction, Syngenta said. Monsanto investors would have held 70 percent of the new company with the rest held by Syngenta stockholders.
Syngenta refused to negotiate after Monsanto in April renewed its approach. Monsanto’s Grant tried to pressure management into talks by meeting in July with Syngenta shareholders in Europe. When that failed to spur talks, Grant met on 18 August with Syngenta Chairman Michel Demare in Zurich to present the sweetened offer, according to three people familiar with Monsanto’s strategy.
The price bump and increased breakup fee were intended to address the Swiss company’s concerns, the people said. Demare called Grant on Wednesday morning to say the board had rejected the new proposal, the people said.
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