NEW YORK (The Deal) -- Swiss agricultural chemicals maker Syngenta AG (SYT) on Friday, May 8, said its board has rejected a long-rumored, unsolicited Sfr41.7 billion ($45.2 billion) takeover approach from seed giant Monsanto (MON) because the offer was too low and could be tough to complete.
Syngenta, of Basel (Switzerland), said Monsanto had hoped to pay Sfr449 per share in cash and stock for Syngenta, a 38% bonus to the target's Thursday close. The bid included at least 45% in cash.
"Monsanto's proposal does not reflect the outstanding growth prospects of Syngenta's integrated strategy and the significant future value potential of the company's crop-focused innovation and market leading positions," said Syngenta Chairman Michel Demaré.
The executive noted that Syngenta is the world leader in crop protection chemicals and No. 3 in seeds, highlighting both the logic and difficulties of the approach. Monsanto, of St. Louis, is the world's biggest seed maker but needs to bulk up in chemicals to remain competitive -- any merger would have to include significant disposals, such as Syngenta's U.S. seed business, to win regulatory approval.
Syngenta shares leapt 17.3%, or Sfr57.60, in late morning Zurich trading to Sfr390.3.
Monsanto may also want Syngenta in order to reincorporate in Syngenta's Alpine home to save tax dollars in what is commonly known as an inversion deal. Such acquisitions have raised hackles in Washington and the Treasury Department last September instituted new rules to prevent such deals, albeit with mixed results.
Monsanto also has a difficult reputation because of its central role in the ongoing dispute over genetically modified seeds, possibly making a combination more difficult amidst European distaste for the technology. Still, it's the only company currently licensed to sell such seeds in the EU where it hawks a modified corn.
The two companies have reportedly been talking for over a year and Syngenta has consistently turned away the overtures. Analysts say even if Monsanto can't win over Syngenta, the target may remain a target -- rivals such as Germany's BASF SE and Bayer AG as well as Dow Chemical (DOW) and DuPont (DD) and even China National Chemical could be interested to better compete in agricultural chemicals.
Neither company is a particularly active buyer though Syngenta three years ago spent $113 million buying Alachua, Fla.-based grass chemical maker Pasteuria Bioscience, $125 million on the professional insecticides unit of DuPont and nearly $30 million to develop and sell crop protection products based on RNA-interfering technology from Belgium's Devgen NV.
Monsanto is taking financial advice from Morgan Stanley, while Syngenta's financial adviser is Goldman Sachs Group, according to Reuters.Must Read: 10 Stocks Carl Icahn Is Buying