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Reuters: Monsanto seeks to sell seed business for Syngenta takeoverqrcode

May. 15, 2015

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May. 15, 2015
U.S. seeds giant Monsanto (MON.N) is trying to line up buyers for assets worth up to $8 billion to appease competition authorities before making a fresh takeover approach for Swiss Syngenta, possibly within three weeks, industry sources said.

Monsanto is expected to tap German chemicals group BASF (BASFn.DE), an existing joint venture partner, as it seeks a buyer for the U.S. seeds business of Syngenta, which can't be part of its proposed takeover, sources said.

The St. Louis-based group is after Syngenta (SYNN.VX) for its industry-leading crop chemicals, driven by the idea that seeds and pesticides will be better sold and developed together.

Monsanto produces glyphosate , or Roundup, the world's most widely used broad-spectrum herbicide, and has engineered a range of proprietary crops that resist it.

Syngenta closely integrated its seeds and crop protection operations in 2011 and Monsanto is expected to unravel some of the main strategic decisions that shaped the group over the last four years - selling off seeds and merging Syngenta's crop chemicals with Monsanto's seeds.

Global antitrust authorities are expected to demand remedies to reshape the balance of power in the crop protection industry before any combination is allowed.

Syngenta's management will not want to be seen backing a deal that is then shot down by antitrust watchdogs, two industry sources said.

Monsanto commands about a quarter of the $40 billion global seeds market while Syngenta's own seeds business has a global market share of 8 percent.

The Swiss group's seeds business could be worth between $6 billion and more than $8 billion, according to analysts. It will have to be sold because authorities are expected to block Monsanto from entrenching its dominance of the U.S. soy and corn seeds market.

Monsanto has worked closely with BASF since 2007 when the two companies established a joint venture to develop higher-yielding and stress-tolerant versions of corn, soy, cotton and canola.

But Monsanto could also sound out Chinese companies such as China National Chemical Corp (ChemChina) for Syngenta's glyphosate-based herbicides, a sector banker said, pointing to products containing glyphosate as likely to raise antitrust concerns.

"What Monsanto needs is a stronger antitrust case," said another source, who is close to a rival chemicals group monitoring the situation and asked not to be named.

The U.S. group has so far been unable to get a firm commitment from prospective buyers which include German pharmaceutical and chemical company Bayer (BAYGn.DE), another banker familiar with the industry said.

The bankers said some suitors will likely demand chunks of Monsanto's seeds business as part of any deal.

Zuercher Kantonalbank analyst Martin Schreiber said Dow Chemical (DOW.N) could be another possible bidder for Syngenta's assets.

Liberum analyst Sophie Jourdier said antitrust issues would not be insurmountable but highlighted the risk that U.S. farmers might lobby authorities to consider the combined group's dominance of the broader agricultural inputs market and not look at seeds and chemicals separately, which would put the entire deal at a risk.  

Monsanto is looking to a new generation of compounds, such as Syngenta's Acuron herbicide to replicate the success of the glyphosate-centered seeds franchise.

Spokesmen at Monsanto, Syngenta, BASF and Bayer declined to comment while representatives at Dow Chemical and ChemChina were not immediately available for comment.

Source: Reuters

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