Monsanto Drops 47 Billion Dollar Bid for Syngenta
UPDATE (2:38 PM Pacific, 8/26/2015): Syngenta has issued a comment on Monsanto's $47 billion bid.
ST. LOUIS, MO - Monsanto’s chase to acquire Swiss competitor Syngenta ended early this morning as the company dropped its recent $47 billion bid.
To avoid backlash from institutional investors, Monsanto has instead chosen to re-implement a share buyback program “as soon as practical” and focus its efforts on a five-year plan to double its earnings.
As of 1:15 PM EDT, Monsanto shares were up approximately 7 percent to $96.02. Syngenta’s stock, on the other hand, was down nearly 11 percent to $69.48.
The decision to finally end the pursuit came after Syngenta had repeatedly rejected several offers from Monsanto, the most recent being the $47 billion bid for the company. Syngenta had reiterated time after time that the previous offers fundamentally undervalued the company’s prospects and underestimated the significant execution risks.
According to a source close to Monsanto, officials from both companies met in person and discussed the matter over the phone. The source told Reuters that Syngenta had rejected the most recent offer this morning.
Monsanto’s latest offer included a $3 billion break-up fee if the transaction was blocked by regulators or fell apart for various other reasons. The company was persistent, despite Syngenta’s rejections, even going so far as to suggest that it would divest itself of Sygenta’s seeds and crop genetics portfolio if the deal were to go through.
“Without a basis for constructive engagement from Syngenta, Monsanto will continue to focus on its growth opportunities built on its existing core business to deliver the next wave of transformational solutions for agriculture,” Monsanto said in a press release.
In a press release from Syngenta, the company stated that Monsanto failed to provide clarity on the following four issues:
- Their estimate of total cost and revenue synergies
- Their assumptions regarding net sales proceeds of seeds and traits
- The nature and extent of regulatory covenants that they were prepared to offer
- The assessment of risks and benefits from a tax inversion to the United Kingdom
As a result, Syngenta rejected the proposal, saying that it significantly undervalued the company and the merger was fraught with execution risk.
Combined, the two companies would have had approximately 45 percent of the global market for seeds, according to the Wall Street Journal. The annual revenue of the two companies is around $31 billion.