Dive Brief:
- The four-month spectacle is over, for the moment, anyway: Monsanto gave up its latest offer for a takeover of competitor Syngenta.
- After Monsanto made the offer on Aug. 18, for about $47 billion with a $3 billion reverse break-up fee, Syngenta rejected the proposal once again.
- "We engaged with Monsanto in good faith and highlighted those key issues which required more concrete information in order to continue a dialogue. We take note of Monsanto's decision. Our Board is confident that Syngenta's long-term prospects remain very attractive with a leading portfolio and a promising pipeline of new products and technologies. We are committed to accelerate shareholder value creation," said Michel Demaré, chairman of Syngenta, in a statement.
Dive Insight:
Syngenta included four specific points in the company's statement that outlined the information Syngenta felt it still needed from Monsanto to make a decision: "their estimate of total cost and revenue synergies; their assumptions regarding net sales proceeds of seeds and traits; the nature and extent of regulatory covenants that they were prepared to offer; [and] the assessment of risks and benefits from a tax inversion to the United Kingdom."
Monsanto said it could take care of antitrust concerns and would have sold off Syngenta's seeds business. Monsanto insisted there would have been "substantial synergies" meaning higher profits for the combined company, Reuters reported.
Monsanto higher-ups "are pretty fed up. There is a complete frustration about the whole pursuit and that is why this is the end of the Syngenta talks," Piper Jaffray analyst Brett Wong told Reuters.
Not all Syngenta shareholders are thrilled about the news. "They have to justify to their shareholders that they can create the value that they have just turned down," said Pauline McPherson, co-fund manager of Kames Capital's global equity fund, which holds Syngenta stock, to Reuters.
Monsanto said it will now turn its focus to building its core business and reaching its goal for a five-year plan to more than double fiscal-year 2014 ongoing earnings per share by 2019. The company will pick back up a share buyback program as well.
"Now Monsanto must weigh other options, such as joining with different pesticide manufacturers, to better integrate its seeds business with crop chemicals, a strategy that [CEO Hugh Grant] has said made sense regardless of the outcome of its merger proposal," The Wall Street Journal reported.
After the latest news, Syngenta's shares saw a more than 18% decline, while Monsanto's rose more than 7%.