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Strategies & Market Trends : Speculating in Takeover Targets
ULBI 10.68+1.2%3:59 PM EDT

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To: richardred who wrote (3774)5/6/2015 9:40:20 AM
From: richardred  Read Replies (2) of 7048
Monsanto Could Take Over Syngenta Despite Antitrust Hurdles, Reports Say

Monsanto might take over Syngenta in a move that would make Monsanto the world’s largest player in both seeds and agricultural chemicals, according to a Bloomberg report. After Bloomberg broke the news that Syngenta could merge with Monsanto, Syngenta rose about 15 percent and Monsanto rose nearly three percent to start off the new month. At that point, Monsanto’s market value was placed at $55.8 billion. Though it might seem like Monsanto, already considered an “Ag Giant” by most of the world, might face fierce opposition in antitrust laws, Deutsche Bank analyst Virginie Boucher-Ferte said the antitrust hurdles would not be “insurmountable,” according to Seeking Alpha.

“Although MON is global #1 in seeds and Syngenta #3, Syngenta’s mkt share is relatively small at c8% vs. c25% for MON. Even if there would undoubtedly be some antitrust issues in some countries/regions for some crops (seeds is a regional market), we note Syngenta’s seeds business is currently perceived as the weak spot‚ ‘stained’ by recent problems in its US corn business. Therefore, if some of Syngenta’s seeds assets had to be divested as a pre requisite for a deal, we don’t think the market would see it as a problem.”

Boucher-Ferte said that it would make sense in the long-term perspective for Monsanto to acquire Syngenta, especially considering that Monsanto’s star herbicide formulations of glyphosate are demonstrating problems as nuisance weeds adapt to resist the chemical, according to Street Insider. Syngenta’s market value is about $35 billion. In order to address antitrust laws, Monsanto allegedly planned to sell parts of the merged corporations to other large corporations, including Bayer, though a Bayer spokesperson said that that was just speculation, the Bloomberg report stated.

Monsanto has risen above antitrust accusations before. In 2012, the U.S. Department of Justice dropped its investigation into alleged practices that would eliminate competition. That same year, multiple states led by the State of Iowa closed a five-year probe into the company to see if it violated antitrust laws, and no action was taken against Monsanto at that time, according to Reuters.

Public opinions on the companies have been less than ideal in recent years. In the later half of 2014, Syngenta was the target of a multi-state lawsuit by farmers who alleged that they suffered significant financial losses after the GMO seed giant sold genetically engineered corn seeds to the farmers before being approved for import by the Chinese government, an earlier Inquisitr report indicated. Monsanto was hit with more bad press after a report by the World Health Organization (WHO) International Agency for Research on Cancer (IARC) published findings in The Lancet Oncology that suggested its glyphosate-based herbicide is “probably cancerous to humans,” Inquisitr reported earlier this year.

According to the St. Louis Post Dispatch, Syngenta has suffered from lower than hoped for earnings, and Monsanto might be looking at the merger as a great opportunity to make a profit from Syngenta’s new products like the fungicide Elatus, which is for use on soybeans, peanuts, and potatoes. Still, talks of a merger between the two companies has come up before and fizzled out.

Strengthening the company in the long-term was a vision Monsanto’s CEO Hugh Grant extended to investors as Monsanto executives discussed disappointing fourth quarter earnings at a teleconference about the future of the company’s finances last year. If Monsanto takes over Syngenta and sells off parts of both companies to other major players, Grant’s vision of long-term prosperity for the company that has made over its image multiple times in the past may come to fruition. Still, one question keeps popping up in the newsfeeds after Bloomberg‘s announcement. Now that big name corporations like Syngenta and Monsanto are recognized by consumers across the nation, and people in states like Vermont and Oregon are standing up against them, could a takeover actually pass through antitrust laws in today’s climate of public scrutiny?
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