Monsanto Said to Plan Herbicide Sale for Takeover Approval

June 8, 2015 11:02 AM
Monsanto Said to Plan Herbicide Sale for Takeover Approval

Monsanto Co. is adding Syngenta AG’s glyphosate weedkiller to the list of businesses it would sell to win regulatory approval for its proposed takeover of the Swiss agricultural chemicals maker, a person with knowledge of the matter said.

Syngenta’s glyphosate unit would be divested since Monsanto also produces the herbicide, said the person, who asked not to be identified because the information isn’t public.

St. Louis-based Monsanto markets glyphosate under its Roundup brand. Syngenta sells it as Touchdown, one of the two main brands that make up its non-selective herbicide unit, which generated $1.45 billion in revenue last year.

Spokesmen for Monsanto and Syngenta declined to comment on the planned asset sales.

Monsanto, the world’s largest seed company, is still working on a deal for Syngenta, despite the Swiss company’s rejection on May 8 of its unsolicited $45 billion cash-and-stock offer. Monsanto has said it would sell all of Syngenta’s seeds and genetically engineered traits to get regulatory approval. Syngenta’s acetochlor corn herbicide business would also be divested, the person said.

Syngenta is the world’s biggest crop-chemical producer and combining it with its U.S. rival would be the largest-ever deal in the agricultural-chemicals industry. Monsanto is seeking to eliminate any overlap, so that the Syngenta deal wouldn’t make its existing business lines any bigger, the person said.

Monsanto will work with regulators to ensure Syngenta’s seed unit is sold to a company capable of competing in the market, the person said. Syngenta’s seed segment’s revenue was $3.16 billion last year, about 21 percent of total sales.

Regulatory Risks

Lawyers for the two companies have been quietly working to resolve regulatory concerns, people with knowledge of the situation said Tuesday. Syngenta rejected Monsanto’s 449-Swiss- franc-per-share offer as too low and because it doesn’t sufficiently account for regulatory risks in such a deal. The bid represented a 43 percent premium to Syngenta’s share price at the close on April 30 just before Bloomberg News reported the proposal.

Syngenta may be willing to consider a bid of 500 francs or more, a person with knowledge of the matter said last week. Its American depositary receipts dropped 1.4 percent to $88.33 at the close in New York, giving Syngenta a market capitalization of $41 billion. Monsanto rose 0.2 percent to $113.80.

Germany’s BASF SE is on the lookout for assets that would be divested, people familiar with the matter said Thursday. U.S. agrochemicals producer FMC Corp. said Tuesday it would try to buy any pesticide brands that regulators force Monsanto to sell.

What do you think of this potential deal between Monsanto and Syngenta? How do you see it affecting U.S. farmers? Share your opinion on the AgWeb discussion boards.


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