Syngenta COO: Why ChemChina Offer Beat Monsanto’s
Syngenta Chief Operating Officer Davor Pisk says he is confident the proposed acquisition by ChemChina will ultimately help preserve choice for growers in a time of increasing industry consolidation.
If Syngenta had accepted a bid from Monsanto, that would not be the case, he contended on a conference call following Wednesday’s merger announcement.
When asked on the call how the ChemChina deal — valued at more than $43 billion — was preferable to Monsanto’s reported $47-billion bid to buy the company last year, Pisk countered that it never had a deal to consider in the first place, and if it did, there were too many concerns about whether it would close, and what the outcome would mean for its stakeholders.
“There was nothing formally on the table that we would be able to put alongside what we have from ChemChina, which is an all-cash offer and secured by committed financing,” Pisk said. A high proportion of the value of Monsanto’s bid came in the form of Monsanto shares, which he pointed out have dropped around 25% to 30% since the time of the merger discussions. He added that uncertainty about whether a Monsanto deal could be completed due to regulatory clearance questions further stymied the talks.
“We have a much more compelling offer for all of our stakeholders (with the ChemChina offer), whether it be employees, because (the deal) is not contingent on generating cost synergies, meaning job cuts all over the world. It is not intended to result in a reduction in choice for growers. I think with a merger between Syngenta and Monsanto, we would have one less player in an industry that is already getting fairly concentrated following the Dow-DuPont announcement. We are able to meet the needs of our customer stakeholders much more confidently with a ChemChina offer than we would have with a Monsanto one,” Pisk added.
Pisk also addressed questions on the company’s future in research and development on the call.
“Our plans in R&D remain in place and we intend to spend between 9% and 10% of our sales revenue to invest in R&D activities … We are unlikely to exceed that but we are committed to not seeing that diminishing in the future,” he said.
Pisk added that he does not expect the company to receive preferential treatment from the Chinese government on regulatory matters, despite ChemChina’s status as a state-owned entity, although he believes it will be better able to understand regulatory issues “than we could if completely on the outside looking in.”