Syngenta Rejects Monsanto’s Latest Offer
Monsanto Company said it would pay Syngenta a $2 billion break-up fee if it was unable to get the appropriate regulator approvals to complete a purchase. In a letter to shareholders, Syngenta Chairman of the board Michel Demaré, and CEO Mike Mack “a wholly inadequate reverse regulatory break fee” and said Monsanto’s second salvo “represents the same inadequate price, same inadequate regulatory undertakings to close, same regulatory risks and same issues associated with dual headquarters’ moves.”
Monsanto’s second offer reiterated a price of $477 (449 CHF) per share. The proposal “would provide Syngenta shareholders with a substantial premium of more than 43% over the $334 (314 CHF) unaffected share price on April 30, 2015 and a more than 45% premium to Syngenta’s 52-week volume weighted average share price,” according to a release from Monsanto. The deal would also create value through ongoing ownership in the combined company.
“We’re encouraged by the reaction to our proposal from our respective shareowners, customers and other stakeholders,” said Hugh Grant, Monsanto Chairman and CEO. “It is disappointing that Syngenta has not engaged in substantive discussions about the many benefits of this combination, including the benefits for farmers around the world. We remain committed to unlocking the opportunity of this combination and pursuing constructive conversation with Syngenta’s management and board. Monsanto devoted significant time and resources analyzing the potential combination with Syngenta, and we are confident in our ability to obtain all necessary regulatory approvals. We’ve backed our confidence by agreeing to divest overlapping businesses and offered a $2 billion reverse break-up fee to further demonstrate our commitment to this combination.”
In a letter to shareholders, Syngenta executives responded to the latest offer saying “if a transaction were to be announced and not consummated, there would be significant harm and value destruction for Syngenta and its shareholders, which requires a careful assessment of all risks and a clear path to closing, and is in no way adequately addressed by a paltry reverse regulatory break fee relative to such fees seen in transactions with comparable levels of regulatory risk.
“Further, Syngenta’s Board, in conjunction with its legal advisors, does not think the regulatory issues are resolved as simply as by a pre-agreed and pre-announced package of horizontal divestitures, which is Monsanto’s proposed approach.”