Monsanto Bites Back
Monsanto, the U.S. agribusiness giant that controls a quarter of the entire global seed market, could soon be even bigger and more powerful than it already is, following renewed speculation over its interest in Swiss agrichemicals firm Syngenta. The logic behind the deal is clear: Monsanto ranks as the world’s largest purveyor of seeds while Swiss-based Syngenta is the world’s largest pesticide and fertilizer company.
A Monsanto-Syngenta tie-up would “deliver substantial synergies that create value for shareholders of both companies”, said Monsanto president and COO, Brett Begemann, adding that cash from these side deals would make an acquisition easier to finance. It would also be the largest-ever acquisition of a European company by a U.S. rival.
The target, Syngenta, seems somewhat less enthusiastic. It is the second time in as many weeks that Monsanto has tabled an unsolicited offer for its Swiss competitor. The first time, on May 8, Syngenta politely but firmly rebuffed Monsanto, saying that the offered price of $45 billion undervalued the company. In response to the latest offer Syngenta said a sell-off of its seeds business would not be enough to allay regulators’ concerns about the tie-up.
The 2 C’s: Consolidation and Concentration
If the deal is consummated, the two companies combined would form a singular agribusiness behemoth that controls a third of both the globe’s seed and pesticides markets, as Mother Jones reports:
To make the deal fly with US antitrust regulators, Syngenta would likely have to sell off its substantial corn and soybean seed business, as well its relatively small glyphosate holdings, in order to avoid direct overlap with Monsanto’s existing market share, the financial website Seeking Alpha reports.
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