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Syngenta Spurns Second Monsanto Bid, Citing Antitrust Risks

Possible next steps for Monsanto include a higher offer or hostile takeover

by Melody M. Bomgardner
June 12, 2015 | A version of this story appeared in Volume 93, Issue 24

A grassroots campaign organizes a yearly March Against Monsanto protest in 428 cities around the world. The 2015 march was on May 23.
Credit: March Against Monsanto
Monsanto, often a target of protests, has offered to change its name postmerger.

Seeds and agricultural chemicals firm Syngenta has turned down a revised takeover offer from rival Monsanto, calling the amount inadequate and saying antitrust hurdles are too risky. Monsanto did not raise its original April bid of $45 billion; rather it added a $2 billon breakup fee in hopes of mitigating the antitrust concerns.

As part of the rejection, Syngenta posted two letters on its website that it received from Monsanto CEO Hugh Grant. In an April 18 letter, Grant offered to locate the combined firm’s headquarters in the U.K., a move that would lower its tax burden and help integrate Syngenta’s workers. In addition, he proposed renaming the company.

In a June 8 letter, Grant wrote that consultations with three separate law firms turned up no legitimate basis for antitrust concerns. Syngenta’s claim that regulators would deny the combination because of so-called conglomerate concerns is not valid, he said.

Conglomerate concerns arise in mergers between firms in related markets—such as seeds and agricultural chemicals—that have the same customers. In rare cases, regulators have acted on worries that a merged firm would raise prices or force customers to buy expensive, bundled products. Monsanto said its plan to sell off Syngenta’s seeds business and any overlapping herbicides should be sufficient to satisfy regulators.

Grant said Monsanto is strongly committed to pursuing the buyout. Should Syngenta agree to open its books, he added, Monsanto may increase its price.

Other options for Monsanto are to walk away from the deal or to pursue a hostile takeover by convincing Syngenta shareholders to sell out. John Klein, an analyst at investment bank Berenberg, said he expects Monsanto to stay in the game without raising its offer substantially.

“Monsanto has just upped the pressure on Syngenta to engage in a constructive process,” Klein wrote in a research note. “Offering a staggering $2 billion breakup fee will make it quite hard for the other side to argue that regulatory hurdles are really that high, as Monsanto seems to be very confident that these can be overturned.”



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