Syngenta Jumps 12% Amid News Of Monsanto Bid
Shares of Swiss-based Syngenta AG (ADR) (NYSE: SYT) jumped 12 percent following news that it rejected a $45 billion takeover bid from Monsanto Company (NYSE: MON), according to a Wall Street Journal report.
The proposed price implied a deal worth approximately 41.7 billion francs based on Syngenta’s outstanding shares.
WSJ reported that Syngenta’s board of directors rejected the proposal because it undervalued the company, the potential for scrutiny if Monsanto attempted a tax inversion as part of the deal by moving its tax home to Europe and the potential for antitrust concerns in countries where the two compete.
Monsanto confimed the deal size in a statement and said that it “has long respected and followed Syngenta's business and believes combining the two companies would deliver significant value to all stakeholders, including shareholders.”
Monsanto felt that combining the two companies “would form an integrated global leader in agriculture with comprehensive and complementary product portfolios, and an Ag-focused organization with enhanced abilities to develop and accelerate innovative solutions for growers.”
Addressing the antitrust concerns, based on an analysis from Monstano’s financial and legal advisors, the company was “confident in its ability to obtain all necessary regulatory approvals.”
According to the WSJ report, “The combination of Syngenta and St. Louis-based Monsanto would create an agricultural behemoth with combined annual revenue of roughly $31 billion. Syngenta specializes in chemicals used to protect crops and enhance yield, while Monsanto makes genetically modified crops, although the companies overlap in some areas.”
Andreas Ruhlmann of IG Bank suggested that a rising U.S. dollar could allow Monsanto to improve its offer later if the dollar resumed its uptrend and was back above parity with the Swiss franc.
If a deal was pursued, it “would come as both companies struggle to right their businesses” amid lawsuits over genetically modified crops, Syngenta’s drop in profits over the past two years, and a cost-cutting program in 2014 that was expected save Syngenta $1 billion annually by 2018, the report noted.
Monsanto recently traded at $122.77, up 3.06 percent.
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