Syngenta AG shares soar, rebuffs Monsanto takeover offer

Swiss crop chemicals and seed producer Syngenta announced on Friday it has rejected a $45-billion acquisition proposal by US rival Monsanto Co, saying the offer undervalued the Swiss company and citing significant challenges to closing the deal.

Monsanto offered CHF 449 per Syngenta share, with roughly 45% of the payment in cash. However, after a thorough review of all aspects of the deal, Syngentas Board of Directors unanimously determined to reject the US companys offer as it was not in the best interest of the Swiss firm and its stakeholders, the statement showed.

The bid values Syngenta at about CHF 41.7 billion, based on the number of outstanding shares, compared to the companys market value of roughly CHF 31 billion based on Thursday close. Shares, however, surged as much as 18% in European trading on Friday.

“Syngenta is the world leader in Crop Protection, the number three in Seeds and the first company to introduce integrated solutions for growers,” said Syngenta Chairman Michel Demaré. “Monsanto’s proposal does not reflect the outstanding growth prospects of Syngentas integrated strategy and the significant future value potential of the company’s crop-focused innovation and market leading positions.”

“While Syngentas valuation is currently affected by short term currency and commodity price movements, the business outlook is strong, with emerging markets accounting for over 50% of our sales,” he added. “Recently launched new products are achieving rapid sales growth globally as growers demand the latest technologies, and we have a strong pipeline of innovative crop protection products in development.”

Apart from undervaluing it, Syngenta also said the offer underestimates significant accompanying risks, including regulatory and public scrutiny at multiple levels in many countries.

An acquisition would have created an agricultural giant with annual sales of $31 billion, filling a hole in Monsantos portfolio as it gains a foothold in the crop chemicals business.

The tie-up would have come at challenging times for both companies. Syngenta reported a falling profit in the last two years and faced lawsuits over its genetically-modified corn, while Monsanto suffers a consumer backlash against genetically-modified foods and criticism against a weed killer it produces.

The two companies entered negotiations over a deal last year, but talks fell through partly due to Syngentas concerns over the difficulties the two will need to overcome to conclude a tie-up. At the time, the US company was seeking to re-domicile its tax base, known as tax inversion, but the US government later took steps to make such moves less attractive.

Syngenta AG shares soared 18.36% to CHF 393.80 by 09:55 GMT on Friday in Zurich, marking a one-year increase of 14.31%. The crop chemicals and seed producer is valued at CHF 31.10 billion based on the previous close.