Syngenta (SYNN VX, UW – SF395.80, PT SF240.00) (Ben Scarlett)
Further thoughts on Syngenta as an acquisition target
In this note, we follow up on our earlier comments (link) regarding Syngenta as a potential
take-over target, and address some of the common questions posed to us by investors
following Monsanto’s bid. As a general comment, we expect discussions to persist and
the question is whether or not Monsanto elects to put the offer to Syngenta’s
shareholders, or indeed raises the offer. In our view, a deal appears achievable, with antitrust
restrictions likely to represent the greatest challenge, based on the presumption
Syngenta’s Board at some point accepts a bid. Finding a suitor for Syngenta’s Seeds
business – for which at least a partial disposal is likely to be required to fulfill anti-trust
requirements – is unlikely to pose a problem. However, there may prove to be greater
difficulties in meeting requirements with regards to disposals/sales of herbicide assets,
where a Monsanto-Syngenta combination would otherwise have a substantial market
share in North America and Latam, and in the non-selective markets globally. Overall, we
estimate 15-20% of Syngenta’s sales could be subject to anti-trust considerations. We
estimate potential synergies will likely be in the $600-700m region, but note this figure
The key issues we address in this note include:
1) Potential anti-trust considerations
2) Possible alternative bidders for Syngenta
3) Potential suitors for part disposals
4) Possible defense mechanisms for Syngenta
5) Synergies and other considerations