Monsanto is offering 449.00 Swiss francs per Syngenta share, a roughly 33% premium to Syngenta’s share price in early May. Syngenta rejected the bid on May 8. At the close of trading in Europe on May 11, Syngenta’s share price was 403.00 Swiss francs per share, indicating some investor skepticism that a deal will take place.
Following rejection of the bid, Moody’s Investors Service downgraded Monsanto’s debt rating outlook from “stable” to “negative,” noting that an even higher bid would be required to seal the deal. Monsanto has declined to say whether it is prepared to increase its offer for Syngenta.
A combination of the two firms would bring together Syngenta’s leading crop protection chemicals business with Monsanto’s leading position in seeds, crop traits, and information technology. Monsanto says the combined firm would accelerate the introduction of innovative solutions for growers and help increase the world`s food supply in a sustainable fashion.
Analysts at the investment firm Jefferies say an acquisition of Syngenta by Monsanto would be an effective way for Monsanto to broaden its portfolio of crop protection products, which is dominated by glyphosate, an herbicide to which weeds are increasingly becoming resistant.
But Syngenta says the bid undervalues the firm. “The offer fundamentally undervalues Syngenta’s prospects and underestimates the significant execution risks, including regulatory and public scrutiny at multiple levels in many countries,” Syngenta says. Monsanto’s genetically modified seeds are the subject of intense public scrutiny, particularly in Europe where they are largely banned.
Syngenta argues that Monsanto hasn’t fully taken into account its rapid sales growth in 2015 so far for existing and recently launched products or its “strong pipeline” of pesticides, which it says offers potential peak annual sales of more than $3 billion.