United States seed giant Monsanto is scrambling to line up buyers for Syngenta’s seed business before another takeover attempt of the Swiss company. The assets are valued at about $8B, and the move is designed to “appease competition authorities before making a fresh takeover approach for Swiss Syngenta” (this could occur in the next three weeks). German company BASF may be tapped as a buyer, but Bayer, ChemChina and Dow Chemical are also mentioned as possibly being in the mix.
Monsanto, based in St. Louis, is seeking to acquire Sygnenta “for its industry-leading crop chemicals, driven by the idea that seeds and pesticides will be better sold and developed together.”
Monsanto produces glyphosate, or Roundup, which is “the world’s most widely used broad-spectrum herbicide.” The company has created a range of proprietary crops that are Roundup-resistant.
This is a report from Reuters written by . Additional comment by Greg Roumeliotis and Mike Stone, with editing by Elaine Hardcastle.
Global antitrust authorities are expected to demand remedies to reshape the balance of power in the crop protection industry before any combination is allowed.
Syngenta’s management will not want to be seen backing a deal that is then shot down by antitrust watchdogs, two industry sources said.
Monsanto commands about a quarter of the $40 billion global seeds market while Syngenta’s own seeds business has a global market share of 8 percent.
The Swiss group’s seeds business could be worth between $6 billion and more than $8 billion, according to analysts. It will have to be sold because authorities are expected to block Monsanto from entrenching its dominance of the U.S. soy and corn seeds market.
Monsanto has worked closely with BASF since 2007 when the two companies established a joint venture to develop higher-yielding and stress-tolerant versions of corn, soy, cotton and canola.
While the antitrust issues might be overcome, some analysts indicate that there is a “risk that U.S. farmers might lobby authorities to consider the combined group’s dominance of the broader agricultural inputs market and not look at seeds and chemicals separately.” This could endanger the deal.