Syngenta AG CEO Mike Mack rolled out a definitive rejection of Monsanto’s $45 billion takeover attempt on Friday, characterizing the merger offer as too risky, the offer on the table as inadequate and Syngenta’s recent financial performance as proof that it’s doing just fine on its own.”
All you have to do is look at the results and look at the potential of the business,” Mack said in an interview after the Swiss pesticide and seed maker released earnings on Thursday that beat forecasts. “The industry is having a downturn, but we are turning in a big set of results.” Mack said the Monsanto offer was “inadequate on so many perspectives” and too vulnerable to possible objections from antitrust regulators. Monsanto’s proposal involves combining its seeds and biotechnology business with most of Syngenta’s crop-chemicals operations, creating a powerhouse in both businesses. Despite Syngenta’s public resistance to the deal, Monsanto has waged a high-profile campaign to win over shareholders. Just after Syngenta’s results, Monsanto said its proposed combination looked beyond six months of results. Monsanto CEO Hugh Grant said Syngenta did not have a long-term plan that could create the same value as Monsanto’s offer. Grant also said he was getting backing from Syngenta shareholders after reaching out to them directly. “
From our extensive and transparent outreach to our share owners and Syngenta’s owners, it is clear that there is broad support for our strategic rationale,” Grant said. “The ball remains in their court,” Grant said. Mack said in the interview that he would continue to discuss the offer with Syngenta shareholders. Otherwise, he suggested he believed regulatory risks remained “very real.” “We gave them (Monsanto) our response in April, the same in May and the same in June. They keep getting the same answer, but they still keep making a lot of noise,” Mack said. “The answer is still no.”Mack said the proposed breakup fee of $2 billion offered by Monsanto to Syngenta, should regulators block a merger, but he also said a breakup fee could not make up for the high risk of rejection by regulators. On Thursday, Syngenta said profit for the six months ended June 30 fell 12 percent to $1.22 billion, from $1.39 billion a year earlier. Revenue fell almost 10 percent, to $7.63 billion from $8.51 billion, hit by the strong dollar. Syngenta reports in U.S. dollars, so a stronger dollar reduces the level of sales in other currencies when they are converted to dollars. The weaker results defied and defeated analysts’ expectations concerning the tough environment within and affecting the industry as a whole. Low crop prices have depressed demand for crop-protection products and seeds. Syngenta raised prices in some markets and cut costs. In general, analysts applauded.
“Syngenta has successfully proven that it can be a profitable stand-alone company,” Christian Faitz, an analyst at Kepler Cheuvreux, said. – See more at: http://cropprotectionnews.com/stories/510630120-syngenta-rejects-latest-monsanto-merger-bid-trumpets-earnings#sthash.mhE7vj1J.dpuf
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