Syngenta rejects unsolicited $45bn Monsanto approach

Syngenta, the Swiss agricultural chemicals group, has rejected a $45bn unsolicited takeover offer from its larger rival Monsanto - the latest attempt by the US company to create a powerhouse in the industry.

Basel-based Syngenta said its directors had unanimously dismissed the approach, which was made in recent months, said people close to the matter.

"The offer fundamentally undervalues Syngenta's prospects and underestimates the significant execution risks, including regulatory and public scrutiny at multiple levels in many countries," the Swiss company stated on Friday.

Its reference to "public scrutiny" highlights specific concerns about Monsanto's controversial position as a leader in bio-engineered foods - a fact that could pose an obstacle to any deal by it as it would necessitate regulatory approval in multiple countries.

Monsanto has long sought a deal for Syngenta to gain its crop chemicals business, which would fill a hole in the US company's portfolio and bolster its powerful seeds business.

Last year, people close to the companies said they had conducted talks. However, these discussions collapsed, in part because of Syngenta's fears about the difficulties of completing a deal.

Many analysts have said that any deal for Syngenta would have to involve Monsanto making disposals to satisfy potential antitrust issues - including a sale of Syngenta's US seeds business.

Syngenta revealed on Friday that Monsanto's bid had valued its shares at SFr449, and comprised 45 per cent cash.

Shares in Syngenta jumped 19.8 per cent in late Zurich trading to SFr398, giving the company a market value of SFr37.3bn ($40.2bn).

Michel Demare, Syngenta chairman, said: "While Syngenta's valuation is currently affected by short-term currency and commodity price movements, the business outlook is strong, with emerging markets accounting for over 50 per cent of our sales." It has net debt of $2.4bn, according to its most recent annual report.

Monsanto said it "has long respected and followed Syngenta's business and believes combining the two companies would deliver significant value to all stakeholders, including shareholders".

Shares in Monsanto rose 2.7 per cent to $122.33 just before midday in New York and gave the company a market value of $58.3bn.

Some people close to the situation said they were optimistic that Monsanto could convince Syngenta to engage on friendly terms. But others suggested Syngenta is deeply resistant to a takeover.

Monsanto is being advised by Morgan Stanley and Centerview Partners, while Syngenta is working with Goldman Sachs, these people said. The banks declined to comment.

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In previous talks, Monsanto had planned a takeover of Syngenta as a way to lower its corporate tax rate, by using the transaction to redomicile its tax base from the US to Europe - a ploy known as a tax inversion.

Monsanto's effective tax rate in recent quarters has hovered between 28 per cent and 31 per cent, according to regulatory filings.

However, US Senator Dick Durbin urged Monsanto not to use a deal to move its tax domicile overseas, in a letter to the company's board on Thursday. He said: "As you consider acquiring Syngenta or any other company, I strongly urge you and the board of directors to maintain Monsanto Company's headquarters and its tax address in the United States. You and your board must recognise that your company's continued commitment to America would be good, not only for the country, but also for Monsanto Company's bottom line."

On Friday, it was not clear from Syngenta's statement whether Monsanto was still seeking a tax inversion as part of any deal.

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