Syngenta Said to Build Defenses Against Another Monsanto Offer

Syngenta AG, the agrochemical maker that rejected an unsolicited $45 billion takeover offer from Monsanto Co., is building up defenses as it prepares for a possible higher bid from its U.S. rival, according to people with knowledge of the situation.

The Swiss maker of Polo and Force insecticides has added UBS Group AG to its stable of advisers to speak with investors and monitor changes in shareholdings, said the people, who asked not to be identified because the information is private. Syngenta expects that Monsanto could return as soon as next week with a bid that tops the unsuccessful 449 franc-a-share offer, they said.

Monsanto has to weigh whether it makes financial sense to up its offer amid volatile agricultural cycles that affect crop prices and demand for Syngenta’s range of cropcare chemicals. Syngenta, which snubbed Monsanto’s proposal because it deemed the offer too low and the execution risk too high, may be willing to consider an offer of 500 francs a share or more, said one of the people.

Syngenta gained as much as 2.7 percent in Swiss trading and was up 2.4 percent at 433.70 francs as of 9:03 a.m. The stock has risen 38 percent since Bloomberg on April 30 reported the approach by the U.S. rival. Monsanto’s offer would represent a 43 premium to the price at the time.

Goldman Sachs Group Inc. is leading the advisory team for the Swiss firm, alongside JPMorgan Chase & Co. and UBS, according to people familiar with the matter. Monsanto is working with Morgan Stanley and Centerview Partners. The two companies have continued to hold informal, bilateral talks, one of the people said.

Representatives for Syngenta, Monsanto and UBS declined to comment. Schweiz am Sonntag reported earlier that Monsanto may boost its offer this week.

Political Complexity

Syngenta has questioned Monsanto’s understanding of the political and social complexities of bringing together the world’s top genetically modified crop supplier with the No. 1 agrochemical maker, against a backdrop of antipathy toward Monsanto’s technology in Europe.

The U.S. company’s room for maneuver may in part come down to its ability to get a good price for Syngenta’s conventional and GM seeds business, which would need to be sold to meet antitrust demands, said the people. Selling that unit could enable Monsanto to increase the cash element of the deal, compensating a perceived risk of failure among Swiss investors, said two of the people.

Syngenta Seeds

Syngenta’s seeds business generated revenue last year of 2.89 billion francs ($3 billion) or 21 percent of total sales. Selling the seeds unit plus some herbicide businesses could generate $8 billion, according to a note from Deutsche Bank.

Monsanto has said proceeds from a sale of the seeds business would help the enlarged group have a “responsible capital structure post-close.” Advisers have checked on the level of interest from other potential buyers, including Bayer AG and BASF SE, one of the people said.

BloombergBusiness,  28/05/2015