US agribusiness leader Monsanto Co. has abandoned pursuit of Swiss rival Syngenta AG, which had rejected a recently sweetened US$47 billion offer, Reuters reported.
Syngenta shares fell more than 18 percent on the news, while Monsanto shares jumped more than 7 percent.
The Swiss agrichemicals group said its board unanimously rejected the offer, which it said “significantly undervalued the company”.
Monsanto, the world’s largest seed company, said it still believes in the value of a combination. It will focus on building its core business and meeting long-term growth objectives, adding that it is resuming a share buyback program.
Some farmers had feared that a combined company would have too much power to raise prices for seeds and herbicides. Both companies had acknowledged that a deal would face antitrust scrutiny in several countries.
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,” he said in a statement.
Still, some Syngenta shareholders expressed disappointment over the scuttled deal and questioned Syngenta’s ability to improve its financial fortunes.
“They have to justify to their shareholders that they can create the value that they have just turned down,” said Pauline McPherson, co-fund manager of Kames Capital’s global equity fund, which holds Syngenta stock.
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 US$47 billion. It also confirmed it raised a reverse break-up fee to US$3 billion.
Syngenta said the verbal proposal set a price of 245 Swiss francs in cash and a fixed ratio of 2.229 Monsanto shares per Syngenta share. At market close on Aug. 25 this equated to a price of 433 Swiss francs per Syngenta share.
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 to solicit support for the deal.
But Syngenta’s management team refused repeatedly to open their books and begin negotiations.
Monsanto officials said they still plan to deliver on a five-year plan to more than double fiscal-year 2014 ongoing earnings per share by 2019.
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