Monsanto outlines case for Syngenta acquisition

Despite Syngenta’s rejection of its recent takeover offer as “fundamentally undervaluing” the business, Monsanto has unveiled a putative strategy for combining the two companies.

Monsanto’s recent unsolicited approach (ATN May 8th) was rejected by the Syngenta board after a “thorough review of all aspects of Monsanto’s offer”. Syngenta chairman Michel Demaré stated: “Monsanto’s proposal does not reflect the outstanding growth prospects of Syngenta’s integrated strategy and the significant future value potential of the company’s crop-focused innovation and market leading positions.” Syngenta also pointed to “the significant execution risks, including regulatory and public scrutiny at multiple levels in many countries”.

Monsanto president and chief operating officer Brett Begemann used his address to this week’s 10th annual Farm to Market Conference in New York, organised by the BMO Capital Markets investment fund, to set out his vision and strategic rationale for combining the two companies into a “leading integrated agriculture company”.

Mr Begemann said the integration of Syngenta’s world leading crop protection portfolio with Monsanto’s global seed position would create new value for farmers, as well as shareholders. It would have strengths in innovation, with the combined R&D capability driving progress across the major technology-driven platforms of plant breeding, biotechnology, crop protection, microbials and precision agriculture. Secondly, he said the proposal could unlock enhanced scale and reach, offering more of the world’s farmers integrated solutions across a broader set of crops, geographies and production practices than possible from the separate businesses.

Thirdly, the move would accelerate the development of Monsanto’s investment in precision agriculture technologies, building on the Climate weather platform acquired with The Climate Corporation in late 2013. It says providing farmers with more valuable insights about their crops and fields will both help to maximize productivity while ensuring inputs are applied in a precise manner to protect the environment.

Mr Begemann said his team had though carefully about potential combination of Syngenta and Monsanto and is confident about addressing the concerns of competition regulators. In the event of a successful acquisition, he envisages Monsanto divesting all of Syngenta’s seeds and traits assets – with 2014 sales of $3.2 billion - and “certain overlapping chemistry assets”.

“The future of agriculture belongs to those who sustainably steward every field – with precise, integrated solutions to enhance the productivity of every seed on an increasingly static footprint,” Mr Begemann concluded. “Companies with a track record of innovation and with the vision and discipline to execute will succeed in this new space.”

Posted on May 22, 2015 and filed under Company News, Crop Protection Products, Seeds.