Monsanto Co., the world’s largest seed company, met this week with Syngenta AG shareholders in a bid to pressure the Swiss rival into negotiations after a $45 billion takeover offer was rejected.
Chief Operating Officer Brett Begemann and Chief Technology Officer Robb Fraley met Monday and Tuesday in Europe to discuss the merits of the bid with Syngenta investors, many of whom also own Monsanto shares, said Scott Partridge, vice president of strategy. The shareholders are frustrated the Basel, Switzerland-based company has refused to negotiate, he said.
“I’d suspect they will try to get to Syngenta’s management and board,” Partridge said Wednesday by phone. “If that helps Syngenta’s board and management engage, that would be a good thing because they haven’t engaged thus far.”
Syngenta has snubbed Monsanto’s unsolicited offer of 449 Swiss francs ($482) a share, with 45 percent in cash, deeming it too low and the execution risk too high. The bid represents a 43 percent premium to Syngenta’s share price at the close on April 30, just before Bloomberg News reported the proposal.
Syngenta closed at 401.70 francs in Zurich on Wednesday, valuing the company at about 37 billion francs.
Monsanto on Sunday said it would pay a $2 billion breakup fee if regulators reject the deal, and it reiterated plans to sell overlapping seed and chemical units to overcome antitrust objections. Syngenta responded that its U.S. suitor has failed to convince it of the merits of a merger, calling the breakup fee “paltry” and saying the planned divestitures don’t resolve the regulatory issues.
Monsanto could “potentially refine our view on value” if Syngenta, through a due diligence process, would allow access to strategic plans and other non-public information that could demonstrate greater earnings potential than indicated by publicly available data, Partridge said.
“Syngenta needs to engage so we can start the diligence process to see if 449 is the right number or not,” he said. “They’ve got a huge premium offer on the table, and they need to talk to us if they have more information where they believe there is greater value.”
Monsanto’s buyout offer would combine its leading franchise in genetically modified crops with the world’s biggest maker of agricultural chemicals. Syngenta faces the twin challenges of a detrimental effect on business of a prolonged pursuit and widespread expectations among investors of a higher offer.
Syngenta may be willing to consider a bid of at least 500 francs a share, a person familiar with the matter said last month.
Monsanto’s meetings this week stemmed from public presentations last month in New York by Begemann, Fraley and Executive Vice President Kerry Preete at investor conferences hosted by Goldman Sachs & Co. and BMO Capital Markets Corp., Partridge said. The executives were invited to talk with investors in Europe, he said.
“We want to be responsive to people who have an interest in this transaction and who believe it should advance and take place,” Partridge said. “We are not out in a campaign.”
Monsanto, in an April letter to Syngenta, proposed creating a new name for the combined company and incorporating in the U.K. Syngenta executives, in discussions that have spanned years, have said they want a neutral location for a merged company, Partridge said. Monsanto doesn’t want to be incorporated in Switzerland and suggested the U.K. as a compromise, he said.
The location wasn’t repeated in Monsanto’s proposal adding the breakup fee this week.
Regardless of where the company is incorporated, it will continue to be run from St. Louis, Partridge said.