Aug 26 (Reuters) – U.S. agribusiness leader Monsanto Co. on Wednesday abandoned efforts to acquire Swiss rival Syngenta AG, which had rejected its recently sweetened offer.
Syngenta shares fell more than 18 percent on news that Monsanto dropped the higher offer. Monsanto shares jumped more than 8 percent.
Read Also
Government to invest in biofuel production
The federal government will invest $370 million in a new biofuel production incentive.
Monsanto, the world’s largest seed company, said it still believes in the value of a combination, but will focus on building its core business and meeting long-term growth objectives. The company also said it was resuming a share buyback program.
Monsanto confirmed that it made a revised offer to Syngenta on Aug. 18, raising a previous offer to 470 Swiss francs per share, valuing the company at roughly $47 billion. It also confirmed it raised a reverse break-up fee offer to $3 billion. At market close on August 25, the offer amounted to 433 Swiss francs per Syngenta share.
But, Monsanto said in a statement, Syngenta continued to spurn the overtures.
“Without a basis for constructive engagement from Syngenta, Monsanto will continue to focus on its growth opportunities built on its existing core business…” the company said in a statement.
Syngenta Chairman Michel Demaré said the company had engaged with Monsanto in good faith and would prosper without the deal.
“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.”
But some unhappy Syngenta shareholders were demanding that the board clarify how it intends to make up billions of dollars of lost shareholder value from the scuttled deal.
A source close to Monsanto said top officials from both companies met in person and talked over the phone as recently as last week.
Syngenta told Monsanto Wednesday morning that it was rejecting the offer, the source said.
Monsanto has said that it wanted to acquire Syngenta primarily to boost its agrichemicals portfolio, which now relies mainly on glyphosate-based herbicides branded as Roundup.
Monsanto is known for its development of genetically altered crops, while Syngenta is the world’s largest agrichemical company and has a broad portfolio of insecticides, herbicides, fungicides and seed treatments used by farmers around the world.
The takeover effort became a public spectacle of sorts over recent months as leaders at both companies argued the merits the proposed deal through the media, videos and other online forums.
Monsanto’s management also tried to force Syngenta’s management team to come to the bargaining table by wooing support from Syngenta shareholders, and met with several farm groups soliciting support for the deal.
But Syngenta’s management team refused repeatedly open their books and begin negotiations. Syngenta officials insisted that Monsanto was undervaluing the company and that an attempted combination would raise serious antitrust issues in many countries, possibly provoking lengthy and costly delays.
Monsanto said it could handle antitrust hurdles, and said it would sell off Syngenta’s seeds and genetic traits businesses. The deal would have brought “substantial synergies” translating to higher profits for a combined company, Monsanto said.
Monsanto officials “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,” said Piper Jaffray analyst Brett Wong.
Wong said Monsanto would probably stake out another acquisition target soon to boost its crop chemicals holdings.
Some observers speculated that Monsanto might at some point be back to pursue Syngenta, but Wong said he sees the deal as dead.
Syngenta shares were down more than 18 percent to 309.50 Swiss francs, while Monsanto shares jumped more than 8 percent to $96.77.
Monsanto officials also said they still plan to deliver on a five-year plan to more than double fiscal-year 2014 ongoing earnings per share by 2019.
