Monsanto mulls another takeover for Syngenta

Date:11-18-2015

Monsanto Co. is considering whether to begin another attempt to acquire Syngenta AG after state-owned China National Chemical Corp. made a bid for the world’s largest pesticide maker.

Monsanto is discussing internally the merits of a new offer as well as opportunities to acquire crop-chemical assets from other companies, Chief Operating Officer Brett Begemann told reporters in St. Louis Tuesday ahead of the company’s investor day presentations. Syngenta’s American depositary receipts jumped as much as 9.8 percent in New York.

In August, Monsanto withdrew a $46.6 billion proposed takeover after Syngenta rebuffed its approach. Syngenta is in talks to be acquired by ChemChina, as the Chinese company is also known, after spurning a $42 billion all-cash offer, people with knowledge of the matter said Thursday. Begemann said that has spawned internal company discussions.

“If you are asking me are we having conversations inside of Monsanto, well of course we are,” Begemann said. “Talking and doing is two different things.”

A spokesman for Syngenta couldn’t be reached for immediate comment.

Everybody Is Talking

DuPont Co. and Dow Chemical Co. both said last month they are in discussions for deals on their respective agriculture units.

“I can tell you there are lots of conversations in the industry,” Begemann said. “We are discussing every possibility just like every company out there.”

The crop chemicals industry is bound to consolidate because target companies are spending too much on research and development for new products, he said. Still, Monsanto doesn’t need a big acquisition to reach its goal of doubling earnings to more than $10 a share by 2019, according to Begemann. Profit growth will exceed 20 percent a year following a forecast contraction in the fiscal year begun Sept. 1, he said.

Begemann also said that while Bayer AG isn’t interested in selling its pesticide business, Monsanto could still pursue licensing deals with the German company. He declined to disclose specific deal talks the company has had.

"Everybody is talking now," Begemann said. "We are going to deliver our plans regardless of whether or not there is consolidation. If there is, we would be interested in participating where it makes sense."

Declining Profit

In fiscal 2016, earnings per share will drop to $5.10 to $5.60 a share, excluding restructuring costs and other items, Monsanto said in a statement Tuesday, reiterating a prior forecast. The average of 24 analysts’ estimates compiled by Bloomberg was for profit of $5.42 a share.

Consolidation is likely given the pressures on the industry, Chairman and Chief Executive Officer Hugh Grant said during a presentation to investors.

“We are best placed here at Monsanto in being a leading consolidator or being a partner in an industry that is changing,” Grant said.

The company previously announced plans to eliminate 12 percent of its workforce to save as much as $500 million a year by 2018 as depressed prices for corn and soybeans erode farmers’ spending.

In addition to the restructuring, profit growth after the current fiscal year will be aided by corn prices rising to $4.50 a bushel in 2017 and sales of new products such as Intacta insect-resistant soybeans, reformulated dicamba herbicide and dicamba-tolerant crops, Begemann said.

The end of declining prices for glyphosate, sold by Monsanto as Roundup, and moderating currency effects also will benefit earnings, he said.