Syngenta may prime for deal with DOW
Date:08-29-2014
Syngenta and Monsanto held preliminary talks with advisers earlier this year about a combination that never came to fruition, people familiar with the matter have said. Syngenta’s willingness to have such conversations signals it’s open to a deal, whether as an acquirer or as a target, according to shareholder Wintergreen Advisers LLC. With shares down 9.5 percent in the last 12 months amid slowing revenue growth, Berenberg Bank said an acquisition could help the crop chemicals company improve its prospects.
One option for $34 billion Syngenta is a takeover of Dow Chemical Co. (DOW)’s agricultural business, said Alembic Global Advisors and SunTrust Banks Inc. Dow Chief Executive Officer Andrew Liveris has suggested the company is open to divesting that unit. DuPont Co. (DD) and Basel, Switzerland-based Syngenta could also merge and then spin off the U.S. company’s non-agricultural businesses, said Zuercher Kantonalbank.
A representative for Syngenta said the company doesn’t comment on speculation. Representatives for Midland, Michigan-based Dow and Wilmington, Delaware-based DuPont declined to comment.
For Dow, selling its agricultural business may be a way to unlock value as activist investor Dan Loeb pressures the company to improve profitability, Sheehan of SunTrust said.
The $64 billion company is already planning to divest as much as $6 billion of low-return assets. Reuters reported yesterday that Dow is in the process of selling two of its speciality chemicals subsidiaries, which could get a combined $2 billion.
When asked about a possible deal for the agricultural division in July, Dow CEO Liveris said “there are no sacred cows.”
That unit and Syngenta share similarities that would unlock value if they were combined, Hassan Ahmed, co-founder of Alembic Global Advisors, said in a phone interview. “A Dow agriculture business and Syngenta marriage could actually result in significantly higher synergies than a Syngenta marriage with a more seed-oriented company such as DuPont’s agriculture business or Monsanto for that matter.”
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