Monsanto-Syngenta Merger: A Seedy Affair That Was Thankfully Nipped in The Bud
Yes-you read the title right. Biotech juggernaut Monsanto was planning to takeover Syngenta as, after their failed merger proposal in April 2015, the company had even sent a second proposal letter on June 6th 2015 for a possible takeover. The difference between the first and second proposal was the fact that Monsanto had also promised a regulatory break fee of several million dollars. However, last month, the company abandoned all its courting efforts despite the very public news that their shares are not doing well. The Company it seems is trying to reassure its shareholders with a complete image makeover through new corporate ventures such as data handling. As their chief technology officer Robert Fraley says: “We have transformed from a purely chemical company to a biotech company and then to a seeds company”.
Since the time of this news breaking out, the company’s shares did see a bit of an upward rise, but we wonder if this is really going to convince activists, concerned farmers and health conscious consumers about the notorious company mending its ways.
To those that are new-here is a summary of what would have been a likely marriage between Syngenta and Monsanto:
Monsanto with its total market value of $58 billion USD offered to merge with Syngenta-a global Swiss Agribusiness and Biotech company. Two individuals who chose to remain anonymous stated that “earlier in April, Monsanto offered to take over the chemical giant- a $35 billion company (though reports suggest that it has not shown meaningful growth since 2012). The former also offered to increase the price to $46 billion in June 2015. But Syngenta was hesitant it seems due to ‘failure to reach an agreement and antitrust hurdles’.” Monsanto persisted but now the latest news is that it might have given up. Both companies had held preliminary talks last year but the top level management for Syngenta decided against the negotiations.
While other chemical companies like BSF and DOW chemical companies hold more value than Monsanto, it is the latter that has a stronghold over the seed market. Syngenta, on the other hand, is a giant in the crop chemical business (it is a major producer of chemical herbicides like Paraquat, Altrazine and Metolachor ) so the merger would have established Monsanto as the key player in GMO seeds and chemical arena. This would have given Monsanto an even greater control over the food market.
From consumer and farmers’ point of view this merger would have spelt the following:
- Farmers would have to shell out more money for biotech seeds that offer better weed control and insect resistance
- This would mean more glyphosate resistant crops that would give farmers a freehold over spraying more of the chemical in their fields with view of better weed and insect control
Monsanto has always received flack from health conscious consumers and concerned farmers for its GMO seeds. The company has also always been on the lookout for greater incentive than they have presently to develop herbicide resistant crops. Currently they have a relatively small chemical division with its RoundUp ( the brand name for the chemical glyphosate) –a toxic herbicide that makes up a third of its sales. Glyphosate or RoundUp, according to Monsanto’s website “allows farmers to decrease their use of herbicides”. However, over the years, the effectiveness of Roundup has reduced greatly as both insects and weeds evolved and started resisting Glyphosate. Farmers have to respond by increasing their use of pesticides-both Roundup and other toxic chemicals. Many news reports state that Monsanto has always known about the linkup between glyphosate and its toxicity and cancer link.
Monsanto is clearly trying to rebrand itself as a sustainable agriculture company with this transformation into a data handling company. Since the news of the failed merger reached the ears of investors, their dipping shares took a slight upward turn.
Few people have been in favor of the likely Syngenta-Monsanto merger and most heaved a collective sigh of relief after hearing the news that the deal did not get through. Activists were especially glad after having been on the edge for months when the news of the likely merger had come through. The Biotech Bully Monsanto has been ranked as one of the worst companies in the world. The last thing people want is for it to get an increased edge over its competition.
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