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Monsanto Plans $10 Billion Buyback After Syngenta Talks End (1)
2014-06-25 13:11:02.949 GMT
(Updates with comment from analyst in fifth paragraph.)
By Jack Kaskey
June 25 (Bloomberg) -- Monsanto Co., the largest seed
company, announced a $10 billion stock buyback plan to boost
investor returns after ending preliminary talks about a takeover
of Syngenta AG that would have cut its tax bill.
The company intends to finance the two years of repurchases
with debt. That will shift its capital structure from a net cash
balance to net debt of 1.5 times earnings before interest,
taxes, depreciation and amortization by the end of August 2015,
St. Louis-based Monsanto said today in a statement.
Monsanto also raised its full-year earnings forecast and
posted better-than-expected fiscal third-quarter profit. The
shares rose 3.7 percent in pre-market trading.
Chairman and Chief Executive Officer Hugh Grant laid out
plans to double earnings per share in five years, supported by
further gains in the seeds business and newer business such as
precision farming. The share buybacks are bigger than expected
and will lower the share count by about 15 percent, said Mark
Gulley, a New York-based analyst at BGC Financial LP.
“They have listened to shareholders and they are taking
advantage of very strong fundamentals,” Gulley, who recommends
buying the shares, said by phone today.
Monsanto and Syngenta, a $35 billion competitor, recently
explored the idea of a merger in discussions with their
advisers, people familiar with the matter told Bloomberg News
June 23. Such a deal would have moved Monsanto’s tax location to
Switzerland. The management of Syngenta, the biggest crop-
chemicals maker, decided against negotiations, the people said.
Inversion Deals
The mooted transaction follows other so called tax-
inversion deals that would allow other U.S. companies to free up
cash held outside the country. At the end of February Monsanto
had more cash on hand than debt.
Monsanto said in April it spent more than $1.5 billion to
buy back almost 3 percent of its shares over 12 months. The
company has $1.1 million remaining on a prior repurchase
authorization and $6 billion of the new $10 billion program will
be “accelerated,” Monsanto said today.
The company forecast ongoing earnings of $5.10 to $5.20 a
share in the year that ends Aug. 31, up a previous prediction of
$5 to $5.20.
Net income was $1.62 a share in the quarter that ended May
31, compared with $1.66 a year earlier and beating the $1.55
average of 21 analysts’ estimates compiled by Bloomberg. Sales
in the quarter were little changed at $4.25 billion, trailing
the $4.41 billion average estimate.
Monsanto climbed to $126.62 at 9:03 a.m. in New York before
the start of regular trading.
For Related News and Information:
Monsanto Said to Have Weighed Tax-Inspired Deal for Syngenta
NSN N7N4RU6KLVRM <GO>
Soy Farmers See Rally Ending on Record U.S. Harvest: Commodities
NSN N6YUJN6TTDSQ <GO>
Bloomberg Industries Basic and Diversified Chemicals:
BI BDCH <GO>
Bloomberg Industries Agricultural Chemicals: BI AGCH <GO>
Mondanto news: {MON US <Equity> CN <GO>}
To contact the reporter on this story:
Jack Kaskey in Houston at +1-713-547-8404 or
jkaskey@bloomberg.net
To contact the editors responsible for this story:
Simon Casey at +1-212-617-3143 or
scasey4@bloomberg.net
Robin Saponar
2014-06-25 13:11:02.949 GMT
(Updates with comment from analyst in fifth paragraph.)
By Jack Kaskey
June 25 (Bloomberg) -- Monsanto Co., the largest seed
company, announced a $10 billion stock buyback plan to boost
investor returns after ending preliminary talks about a takeover
of Syngenta AG that would have cut its tax bill.
The company intends to finance the two years of repurchases
with debt. That will shift its capital structure from a net cash
balance to net debt of 1.5 times earnings before interest,
taxes, depreciation and amortization by the end of August 2015,
St. Louis-based Monsanto said today in a statement.
Monsanto also raised its full-year earnings forecast and
posted better-than-expected fiscal third-quarter profit. The
shares rose 3.7 percent in pre-market trading.
Chairman and Chief Executive Officer Hugh Grant laid out
plans to double earnings per share in five years, supported by
further gains in the seeds business and newer business such as
precision farming. The share buybacks are bigger than expected
and will lower the share count by about 15 percent, said Mark
Gulley, a New York-based analyst at BGC Financial LP.
“They have listened to shareholders and they are taking
advantage of very strong fundamentals,” Gulley, who recommends
buying the shares, said by phone today.
Monsanto and Syngenta, a $35 billion competitor, recently
explored the idea of a merger in discussions with their
advisers, people familiar with the matter told Bloomberg News
June 23. Such a deal would have moved Monsanto’s tax location to
Switzerland. The management of Syngenta, the biggest crop-
chemicals maker, decided against negotiations, the people said.
Inversion Deals
The mooted transaction follows other so called tax-
inversion deals that would allow other U.S. companies to free up
cash held outside the country. At the end of February Monsanto
had more cash on hand than debt.
Monsanto said in April it spent more than $1.5 billion to
buy back almost 3 percent of its shares over 12 months. The
company has $1.1 million remaining on a prior repurchase
authorization and $6 billion of the new $10 billion program will
be “accelerated,” Monsanto said today.
The company forecast ongoing earnings of $5.10 to $5.20 a
share in the year that ends Aug. 31, up a previous prediction of
$5 to $5.20.
Net income was $1.62 a share in the quarter that ended May
31, compared with $1.66 a year earlier and beating the $1.55
average of 21 analysts’ estimates compiled by Bloomberg. Sales
in the quarter were little changed at $4.25 billion, trailing
the $4.41 billion average estimate.
Monsanto climbed to $126.62 at 9:03 a.m. in New York before
the start of regular trading.
For Related News and Information:
Monsanto Said to Have Weighed Tax-Inspired Deal for Syngenta
NSN N7N4RU6KLVRM <GO>
Soy Farmers See Rally Ending on Record U.S. Harvest: Commodities
NSN N6YUJN6TTDSQ <GO>
Bloomberg Industries Basic and Diversified Chemicals:
BI BDCH <GO>
Bloomberg Industries Agricultural Chemicals: BI AGCH <GO>
Mondanto news: {MON US <Equity> CN <GO>}
To contact the reporter on this story:
Jack Kaskey in Houston at +1-713-547-8404 or
jkaskey@bloomberg.net
To contact the editors responsible for this story:
Simon Casey at +1-212-617-3143 or
scasey4@bloomberg.net
Robin Saponar