The world’s biggest provider of seeds to farmers Monsanto has presented an unsolicited offer of $45 billion to take over their Swiss rival Syngenta. However, the company has not given up as it continues to work on a deal, planning on increasing the initial bid of 449 Swiss francs per share which is a 36 percent premium to Thursday’s closing price.
If a deal does happen, it would provide Monsanto access to highly profitable crop protection chemicals with an estimated potential sales of over $31 billion. Monsanto is already one of the biggest leaders in their industry of genetically modified crop seeds. Syngenta denied Monsanto’s $45 billion offer as it felt the offer undervalued its prospects and did not take into consideration of regulatory risks.
Analysts predict that Monsanto may have to offer a premium of up to 40 percent to the shareholders of Syngenta to make an attractive deal. In addition, antitrust scrutiny is inevitable which could possibly lead to forced sales in certain crops such as United States corn industry. Analysts suggest that American regulators could react when seeing two leaders of the agricultural market combine.
Monsanto’s attempt is also stirring up political controversy, as the deal is likely tax benefits and that Syngenta stands as a highly regarded blue chip for Switzerland. Monsanto Company is an American multinational agrochemical and agricultural biotechnology corporation. Headquartered in Creve Coeur, Missouri, the company is an industry leader in producing genetically altered seeds and herbicide glyphosate.
The company is one of the first to ever apply a biotechnology industry business model to agriculture in which they heavily invested in research and development while recuperating costs through using and enforcing biological patents. With over 21,000 employees, the agricultural giant has generated over $14 billion in yearly revenue in which they serve the worldwide market.
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