Possible Monsanto-Syngenta Merger Concerns US Farmers


by Jacob Bunge

Agribusiness giant Monsanto Co.'s pursuit of Syngenta AG is sowing fears in the U.S. Farm Belt that another round of industry consolidation will eliminate a top competitor for farmers' business and boost prices for seeds and pesticides.

Farmers' concerns could play a critical role in determining whether any deal gets done. Antitrust regulators in the U.S. and elsewhere are expected to closely examine whether a combination would concentrate too much market power in the hands of Monsanto, already the world's largest seed maker by sales and a big supplier of crop chemicals.

Monsanto's roughly $45 billion bid for Syngenta, disclosed in May, spotlights the St. Louis company's sometimes fraught relationship with farmers who depend on it for seeds to grow crops ranging from corn and soybeans to spinach and broccoli. Monsanto's advances in genetic engineering have helped farmers produce bigger crops and avoid using some harsh chemicals previously needed to control weeds and pests. But farmers say those tools come with a high price and strict rules that Monsanto vigorously enforces, sometimes with lawsuits against its customers that have damaged the company's reputation in parts of the Midwest.

Syngenta, the world's top seller of crop pesticides, has rebuffed Monsanto's approach, saying it undervalues the Swiss company and overlooks significant antitrust and political hurdles to a merger, despite Monsanto's pledge to sell off Syngenta's seed business and some overlapping chemical products.

On Sunday, Monsanto reiterated its offer to acquire Syngenta for 449 Swiss francs ($477.87) a share, which Monsanto said represented a 43{f2533179b7c7e7cbdbc11018732de14c82f3d44c9f1e829e9a046cc47141a2e6} premium to Syngenta shares price prior to media reports of a potential deal in late April. It added a $2 billion reverse break-up fee that Monsanto would pay to Syngenta if regulators blocked a deal.

“It is disappointing that Syngenta hasn't engaged in substantive discussions about the many benefits of this combination, including the benefits for farmers around the world,” said Hugh Grant, Monsanto's chief executive, in a statement.

Syngenta had no immediate comment on Monsanto's latest proposal.

Monsanto plans to discuss the potential acquisition with shareholders of both companies in Europe this week, according to people close to the company.

Farm groups including the American Farm Bureau Federation are closely watching the possible deal, which would rank as the agricultural industry's largest takeover. John Hansen, president of the Nebraska Farmers Union and a member of the National Farmers Union's board, said he plans to raise his concerns about the potential deal when the board meets this week in Washington.

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Source:  Market Watch


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