Although the initial offer of $45 billion was made in private, the matter became very public due, in part, to a YouTube video released by Syngenta laying out the parameters of what they called an unworkable deal.
“We have unanimously concluded that the proposal significantly undervalued Syngenta’s prospects, but also really underestimated the huge execution risk of this transaction as well as the substantial damage that could occur to our integrated business,” said Michel Demaré, Chairman of Syngenta’s Board of Directors. “The second proposal was much easier to make a decision on because it was a copy paste of the first proposal.”
The only difference in Monsanto’s second offer was a $2 billion payment to Syngenta if the merger failed to get regulatory approval.
“The fact is that this is a very complex transaction that has been proposed and it will take a long time to be solved and as a result there are a lot of uncertainties and no guarantee of completion,” Demaré said.
Syngenta is not shutting the door on a possible deal with Monsanto, but says it awaits an offer that would be more fitting of the value of the Swiss-based pesticide maker. Much of the news about a possible gobbling up of one agricultural giant by another has been focused around stocks and shareholders, but what will a Monsanto acquisition of Syngenta look like on a farmer-level?
“This possible deal is about bringing innovation to farmers,” said Mike Frank, Monsanto’s Vice President of Global Commercial. “We have a long history of being in the crop protection business, but we haven’t invested a lot from a research and development standpoint. From our perspective, this acquisition would fill out our portfolio, scale up our R & D capability and allow us to accelerate our innovation pipeline, ultimately bringing new tools to farmers.”
There are some overlapping technologies between the two companies and that may have producers wondering how the marketplace might be affected by an acquisition of this magnitude.
“We know that farmers want choice and that farmers need good competition,” Frank said. “What we would buy and keep that Syngenta offers is their crop protection portfolio.”
If the deal were to go through, Monsanto plans on divesting Syngenta’s seed and trait businesses, as well as Syngenta’s Touchdown glyphosate product, which is a direct competitor of Monsanto’s Roundup.
“It would be our responsibility to find good owners for those assets,” Frank said. “At the end of the day the farmers will have the same choices they have today.”
If Monsanto and Syngenta do get to a point that a deal can be made, regulatory bodies from around the world would take a look at the details to make sure it would be a good deal for the two company’s shareholders and their customers, which is ultimately the farmer.
AUDIO: The Ohio Ag Net’s Ty Higgins visited with Monsanto’s Mike Frank about the possible acquisition of Syngenta. Listen to their conversation.