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Why Monsanto’s Bid to Acquire Syngenta Fell Apart



The deal

Monsanto’s (MON) bid to acquire Syngenta (SYT) was intended to combine the R&D (research and development) capabilities of both companies. The deal would have helped Monsanto penetrate further into global markets. According to the company’s management, Monsanto reached only 400 million acres of the core crops market out of the potential 3.5 billion acres worldwide. Syngenta’s deal would have helped Monsanto reach an additional 200 million acres. Needless to say, a deal of this magnitude would have also gotten attention from antitrust regulators.

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Syngenta rejected the deal

  • Much of Monsanto’s (MON) third quarter earnings call was focused on the merger with Syngenta.
  • As an initiative to grow the company through acquisition, Monsanto targeted Syngenta for about $45 billion in August.
  • Syngenta rejected Monsanto’s takeover deal, saying that Monsanto’s proposal “significantly undervalued the company and was fraught with execution risk.”
  • Syngenta also added that the weak farm economics may result in further risks to its shareholders based on the structure of the deal.
  • Recently Potash Corporation (POT) also withdrew its proposal to acquire K+S, citing weakness in the commodities market. For more detail, read Why Potash Corporation Withdrew Its Proposal to Acquire K+S.

The VanEck Vectors Agribusiness ETF (MOO) has 7.3% of its holdings in Potash Corporation (POT) and Mosaic (MOS) combined. In the next article, we will take a look at what analysts are estimating for Monsanto’s 4Q15 earnings.


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