Syngenta rejects $45 billion Monsanto takeover offer

Syngenta AG has spurned a $45 billion unsolicited takeover offer from US rival Monsanto Co, as the proposed deal undervalued the Swiss agrochemical giant, the company said.

According to the Basel-based company, Monsanto's offer of 449 Swiss francs ($486.20) per share valued the company at roughly 41.7 billion francs on the basis of number of shares outstanding, with roughly 45 per cent of the payment in cash.

According to Syngenta, its board of directors unanimously rejected the proposal as it was not in the best interests of the company or its shareholders.

"The offer fundamentally undervalues Syngenta's prospects," Syngenta said in its statement yesterday. The company further pointed out that the proposal underestimated risks involved in executing the deal as also the regulatory scrutiny it would generate. Speculation about a tie-up between the two companies, last year, had led some industry watchers to suggest potential tax benefits for Monsanto, with a so-called inversion involving moving home to Europe. The Obama administration had in recent months initiated tough measures to stop such tax benefits. 

According to commentators, antitrust scrutiny was also another potential roadblock for a deal of the kind in several countries where the two currently competed as the takeover would create a behemoth with combined annual revenue of roughly $31 billion.
 
Monsanto had long been interested in the Swiss company, which sells seeds, insecticides and other crop protection products, as the deal offered it the possibility of a tax-efficient ''inversion'' into Switzerland.

The timing of the offer, which comes less than a month after EU took a landmark decision to allow its 28 member states the freedom to decide whether to allow the planting of genetically modified crops, could also be a major factor behind the offer, according to commentators. Several states such as Austria had been opposed to GMOs leading to a near-complete ban in the EU, one of the world's largest agricultural markets, for over a decade.

Syngenta chairman Michel Demaré said in a statement that the company's internal drive to improve profitability and bring new products to market would allow it to deliver the same benefits promised by Monsanto, considering its strong presence in emerging markets and five years of revenue growth over 10 per cent.