Syngenta rejects Monsanto's new takeover bid despite $2 billion breakup fee

By Daniel Enoch

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WASHINGTON, June 8, 2015 - Syngenta has rejected a second takeover bid from Monsanto, which this time includes a $2 billion breakup fee if the proposed $45 billion deal fails to meet regulatory muster.

St. Louis-based Monsanto's offer, in a letter dated June 6, “represents the same inadequate price, same inadequate regulatory undertakings to close, same regulatory risks and same issues associated with dual headquarters' moves" as in its original offer in April, Syngenta said in a statement. "The only change by Monsanto is to add a wholly inadequate reverse regulatory break fee."

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“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,” Syngenta said.

Anti-trust regulators are sure to take a close look at any deal between the two companies, which together control more than 40 percent of the U.S. seeds market. Monsanto, the world's largest seed seller and the maker of the world's most widely used week killer, Roundup, has promised to sell off Syngenta's seed business to obtain regulatory approval.

In the June 6 letter, Monsanto CEO Hugh Grant noted that Monsanto officials had met three times over the past month with Syngenta's outside antitrust team.

“We do not believe they raised any credible theory that could be used to impede our proposed merger on the basis of competition concerns, given our upfront commitment to divest your entire seeds and traits business and overlapping herbicides in our respective portfolio,” Grant said.

Syngenta disagreed.

“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,” Syngenta said. “There are notable examples of proposed transactions that have been blocked by regulators due to ‘conglomerate concerns' and other non-horizontal issues and the Board has concern that a combination between Monsanto and Syngenta may be viewed as such.”

(You can see Monsanto's original offer dated April 18, and its most recent proposal by clicking here.)

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