Monsanto And Syngenta: Stonewall Street
Recently, I was taking part in an industry-related golf tournament and happened to find a lost golf ball sporting a Syngenta logo.
“You’d better hide that before someone from Monsanto tries to claim it!” joked another member of my foursome. And everyone had a good laugh.
By now, you are doubtlessly aware of the on-again/off-again acquisition dance that’s been played these past few months by Syngenta Crop Protection and Monsanto Co. Since news of this possible Big Six pairing first broke, it has dominated many industry event casual conversations, financial markets talk and social media rumors.
But for now, the possibility of a deal between Monsanto and Syngenta seems dead. At the end of August, Monsanto’s management announced the St. Louis, MO-based company would no longer attempt to acquire Syngenta Crop Protection. This news came mere hours after the Basel, Switzerland-based company’s board of directors unanimously rejected Monsanto’s latest bid as “significantly undervaluing the company and fraught with execution risk.” In fact, Syngenta Chairman Michel Demaré made it clear the company would be just fine without pairing with Monsanto.
“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,” wrote Demaré in a prepared statement. “We are committed to accelerate shareholder value creation.” The company planned to do this in part through a share repurchase program.
For the most part, the agricultural community seemed pleased that two of the industry’s largest crop protection/seed suppliers would remain separate. “American agriculture is already far too concentrated, leaving family farmers and ranchers at a great disadvantage in the marketplace,” said Roger Johnson, president of the National Farmers Union in a statement. “This is clearly not only good news for family farmers, but for economically competitive markets as well.”
Despite this view, market swings on both Wall Street and Main Street ultimately tend to determine if deals such as this take place. At the moment, agricultural fortunes are in a bit of downturn, with commodity prices off better than 40% from their highs a few years ago and grower-customers’ income down by half from 2012.
In this kind of environment, both Syngenta and Monsanto are trying to do what they can to increase their market presences, bottom lines and abilities to aid in agriculture’s long-term goals. Furthermore, many in the ag world still believe some kind of a deal between these two players is possible. When CropLife® asked its readers for their handicap of a Monsanto/Syngenta merger happening, 36% believed it would eventually take place.
In the short-term, the stonewalling of Monsanto by Syngenta will probably continue. But never, ever, say never.