ST. LOUIS, MISSOURI, U.S. — Monsanto Co. on Aug. 26 announced it is stepping away from its efforts to acquire Syngenta after Syngenta indicated that Monsanto’s proposals did not meet the Swiss company’s financial expectations. Even though Monsanto said it continues to believe a combination with Syngenta “would have created tremendous value for shareowners of both companies and farmers,” the company said it now will shift its focus back to growth opportunities around its existing core business.
Monsanto had made repeated and improved offers, with the last proposal coming on Aug. 18. That proposal would have been worth about $46 billion, which amounted to approximately CHF$470 ($486) per share, up from an April bid of CHF$449 ($464).
The proposal also increased the reverse break-up fee to $3 billion. The reverse break-up fee would have been payable by Monsanto if it would have been unable to obtain necessary global regulatory approvals.
“Monsanto will continue its focus on opportunities within its existing core business and resume the implementation of its approved share repurchase program as soon as practical,” the company said. “In addition, Monsanto management confirmed on Aug. 31 its confidence in delivering its five-year plan to more than double fiscal-year 2014 ongoing earnings per share by 2019.
“Monsanto remains the best positioned to drive a comprehensive integrated strategy, with industry-leading assets in breeding, biotechnology, data science, next-generation biologicals, and multiple options to build on its existing crop protection portfolio.”
Commenting on its decision not to engage in Monsanto’s latest proposal, Syngenta said the proposal “significantly undervalued the company and was fraught with execution risk.” Additionally, the company said certain issues were not addressed by Monsanto, including clarity on the estimate of total cost and revenue synergies; the assumptions regarding net sales proceeds of seeds and traits; the nature and extent of regulatory covenants that Monsanto was prepared to offer; and the assessment of risks and benefits from a tax inversion to the United Kingdom.
“We engaged with Monsanto in good faith and highlighted those key issues which required more concrete information in order to continue a dialogue,” said Michel Demare, chairman of Syngenta. “We take note of Monsanto’s decision. Our board is confident that Syngenta’s long-term prospects remain very attractive with a leading portfolio and a promising pipeline of new products and technologies. We are committed to accelerate shareholder value creation.”