Monsanto's Messy Syngenta Courtship Comes to an End

Aug 27, 2015

Breaking up is a hard thing to do. It's even harder when you're a publicly traded, multinational seed or chemical conglomerate. Monsanto, the St. Louis-based seed company that produces the widely-used herbicide RoundUp, had to learn that lesson the hard way. The world's largest seed company announced Wednesday that after months of wooing, it's no longer pursuing Switzerland-based Syngenta, the world's largest producer of farm chemicals. The courtship began in early summer 2015 when Monsanto made an initial bid to purchase Syngenta's chemical operations. It hoped to combine the chemical arm with Monsanto's seed business under a new entity based in London. That company also would have sported a new name and been a powerhouse in the world of agricultural inputs, the things farmers buy to run their operations: seed, fertilizer, pesticides.  Syngenta's executives and board of directors scoffed at Monsanto's advances, publishing private letters between the two companies. The offers, ranging into the tens of billions of dollars, didn't fully represent what the chemical giant was worth, Syngenta officials said. They also expressed concern that the deal as it was laid out wouldn't get past antitrust regulators in countries like Brazil and the United States.  In a final rejection, announced Wednesday, Syngenta made its independence known. "The proposal from Monsanto significantly undervalued the company and was fraught with execution risk," the company said in a statement.  Translation: We're worth more than you can give us. We're going places. And we're better off without you.  For its part, Monsanto officials appeared frustrated during the courtship, which was uncharacteristically public.  "This has been a very unusual deal. I'm kind of used to the situation where two parties meet, they argue, you usually walk out once or twice," Monsanto's Chief Technology Officer Robb Fraley told me in July 2015.  "This has been a deal that has all played out in the public."  The proposal to create a massive new player in farm inputs did bring up serious antitrust concerns from farm groups and watchdogs like the National Farmers Union and The ETC Group. They said the potential agricultural conglomerate's 26 percent share of the global seed market and 29 percent share of the chemical market was too large and that farmers could see their costs rise in the absence of competition.  Officials at Monsanto didn't see it that way.  "Monsanto Company continues to believe a combination with Syngenta would have created tremendous value for shareowners of both companies and farmers," a company statement reads. Or in other words, we could've been so good together, Syngenta. Why can't you just be reasonable?  Now freshly rejected by Syngenta, Monsanto says it will continue to focus on its growth opportunities built on its existing core seed business. While its bread and butter will remain biotech crops, the company still plans to expand into other technologies like data collection, weather prediction, microbial soil amendments, maybe even drones.  The proposed deal has captured the attention of the agribusiness world for most of the summer, a sort of "will they or won't they" drama the agriculture sector rarely sees. Michel Demaré, Syngenta board chairman, is ready to shake it off and move on.  "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," Demaré said in a statement.  There's no indication when Monsanto will start courting again, but the company made clear in June 2015 that if Syngenta turned them down, they'd approach German agrichemical company Bayer.