Syngenta AG (ADR) (NYSE:SYT) closed higher in the previous trading session following the news that rival Monsanto Company (NYSE:MON) has lifted its takeover offer in order to convince the Switzerland based company to negotiate after its previous proposal was rejected.
The new proposal values Syngenta at roughly 470 Swiss francs a share, better than the 449 francs a share Monsanto offered earlier this year, according to Bloomberg citing sources close to the matter. The recent offer translate to a market capitalization of approx. 43.7 billion francs or $47 billion.
The offer includes a bigger percentage of cash than the earlier bid. Syngenta’s board will conduct a meeting, as early as Tuesday, to respond to the revised proposal, according to the report.
An analyst at Bernstein, Jeremy Redenius said that we think Syngenta will refuse this new proposal as it is still far behind what we expect is their own price idea of $62 billion. Though, the new offer and the recent weakness in Syngenta’s share price will force investors to put pressure on the company to negotiate with Monsanto, Redenius added.
Monsanto shares dropped 4 percent yesterday. The new proposal from the St. Louis-based company isn’t essentially final and could be modified if Syngenta decides to start discussions, according to the report. Until now, the Basel-based firm has declined to negotiate with Monsanto, saying that its cost-cutting restructuring has just started to bear fruit and it has stronger prospects on its own.
Spokespersons of both the companies refused to comment on the story.
A successful agreement would help Monsanto to become the biggest producer of seeds and crop chemicals in the world, significantly strengthening its foothold in Europe. Agricultural chemical producers are experiencing a decline in spending on their products, which is making consolidation an attractive option.
