Monsanto on Sunday made a new attempt to acquire Syngenta, the Swiss agricultural chemical manufacturer. But rather than increase the price it is willing to pay, Monsanto instead offered to pay Syngenta $2 billion if Monsanto cannot obtain the regulatory approvals necessary to complete the deal.
“We’re encouraged by the reaction to our proposal from our respective shareowners, customers and other stakeholders,” Hugh Grant, the chief executive of Monsanto, said in a statement issued on Sunday evening. “It is disappointing that Syngenta has not engaged in substantive discussions about the many benefits of this combination, including the benefits for farmers around the world.”
But despite speculation that it would raise its offer, Monsanto kept it at 449 Swiss francs, in a combination of cash and stock, for each Syngenta share, worth about $45 billion. Monsanto said the deal represented a premium of 43 percent to Syngenta’s share price on April 30 before rumors of the offer became public.
Instead, Monsanto chose to address one of the objections Syngenta raised when it both announced and rejected Monsanto’s initial offer on May 8. Syngenta said then that the offer undervalued its prospects and underestimated “the significant execution risks, including regulatory and public scrutiny at multiple levels in many countries.”
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The regulatory issues stem from the fact that Monsanto is the largest seller of seeds in the world, and also has a substantial presence in the herbicide business with Roundup, the world’s most widely used weed killer. Syngenta is the world leader in agricultural chemicals, but also has a substantial position in the seed business.
Monsanto had already said that it would sell off Syngenta’s seed business to obtain antitrust approvals. It also said it would sell other overlapping businesses.
In its statement on Sunday, Monsanto said it was so confident that it could obtain regulatory clearance that it was offering to pay the $2 billion “reverse break-up fee” if it could not.