Monsanto may take a leading role in Agchem acquisitions

Author: PJ Huffstutter

ST. LOUIS (Reuters) – Monsanto Co. executives is discussing whether it should acquire rivals including top pesticide maker Syngenta AG, company executives said Tuesday, as consolidation talks continue in the global agrochemical industry.

“We were talking internally” about Syngenta and other agricultural companies, Monsanto CEO Brett Begemann said during a meeting with investors at the company’s headquarters in St. Louis.

The company’s management explored every possibility of consolidation in both the seed and agrochemical sectors.

Monsanto Chief Executive Hugh Grant, also speaking at Tuesday’s meeting with investors, said the company is “best suited to be a leading consolidator or a leading partner in an evolving industry.”

The world’s largest seed producer abandoned a $45 billion (£30 billion) bid for rival Syngenta in August, and since then almost all the major players in the agricultural chemicals and seed markets have been on consolidation talks amid plummeting grain prices and farm incomes .

Last week, Syngenta rejected a $42 billion offer from state-owned China National Chemical Corp (CNNCC.UL), Bloomberg reported. Dupont Co, Dow Chemical Co. and BASF DE also featured in M&A talks reports.

Monsanto’s internal discussions, which have been ongoing since the company withdrew its last bid to take over Syngenta, include weighing the benefits of bidding on competitors, Begemann said.

In particular, he said Monsanto is keeping a close eye on the agricultural chemical product lines it could acquire if competitors merged their agricultural businesses – such as Dow Chemical and Dupont – and were forced to spin off assets to obtain regulatory approvals.

However, Begemann said they are focusing on chemical assets, not seeds, for such potential acquisitions.

Grant told investors he sees China as an “opportunity” for Monsanto as rising soybean consumption in the country fuels demand for more beans in the United States and South America. Additionally, he pointed to the potential for new features created specifically for China and possibly licensing those features.

Grant said any deals would need to be “strategically aligned” with Monsanto and provide incremental growth.

But he noted that Monsanto does not need to buy or partner with an agrochemical rival to meet its financial projections or growth plans.

The Wall Street Journal reported that Syngenta was in talks with Dupont about merging with its agriculture unit, while Dupont was separately in talks with Dow Chemical about its seed and agricultural chemicals division.

Several people involved in the matter said that earlier this year, BASF prepared loan guarantees for a potential Syngenta bid but never drew on the credit line.

Syngenta, Bayer and Dow could not immediately be reached for comment Tuesday. Dupont said he would not comment on rumors or speculation. “There are many discussions going on and only a few of them will be concluded in the future,” Begemann said.

He said there is “no new news” on Monsanto’s possible actions regarding a possible bid for Syngenta or any other agrochemical company. He declined to comment on whether talks with Bayer had taken place.

Begemann said internal discussions also explored the possibility of new partnerships and licensing agreements with other companies. He added that executives and employees routinely talk to counterparts at other agrochemical companies.

For now, Monsanto “is focused on our core business,” Begemann said. “If the opportunity arises, we will consider it.”

(Reporting by PJ Huffstutter in St. Louis; Writing by Karl Plume in Chicago; Editing by Paul Simao, Grant McCool and Diane Craft)