Monsanto-Syngenta: What Price Is Right?
June 1, 2015 “Money makes the world go around” goes the old song. It goes without saying this works in the world of business deals as well.
For weeks now, agricultural industry watchers have been following the back-and-forth between Monsanto Co. and Syngenta Crop Protection over a possible merger of the two crop protection/seed giants. Officially, Syngenta has rebuffed Monsanto’s attempt at a takeover as “not representative of the true value of the company.” In other words, the offer isn’t high enough in terms of dollars.
Initially, Monsanto offered to acquire Syngenta for approximately $474 per company share. According to most analysts following the negotiations, Monsanto will need to up this amount by another $54 per share, putting the purchase price in the $528 per share range, to get Syngenta to seriously consider selling itself. As with any negotiation, chances are the actual purchase price for Syngenta will end up falling somewhere between these two figures (perhaps just north of $500 per share if I had to hazard a guess).
Loading ...The bottom line on all this is pretty simple – most analysts agree that a joining of Monsanto and Syngenta makes financial and marketplace sense for both companies in the long run (and most think the proposed merger has a better than 75% of happening during 2015). Since the early 2000s, market observers have speculated that the Big Six crop protection product manufacturers would end up as a Big Four. Although it will have taken 15 years for this prediction to come true, a Monsanto-Syngenta merger would be the first step in this process, with other such mergers on the crop protection/seed stage likely to follow.
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