• by Thom Forbes , August 27, 2015

After four months of an aggressive but controversial wooing of Swiss-based agrichemicals company Syngenta, St. Louis-based Monsanto is walking away after its third and last offer — $46 billion — was summarily rejected.

“Dropping the bid marks a high-profile defeat for Monsanto chief executive Hugh Grant, who spent much of the spring and summer pitching the deal to investors,” observes Jacob Bunge for the Wall Street Journal. “The combination of Syngenta’s position in pesticides with Monsanto’s seeds business offered ‘transformative’ potential, he had said, and the deal was his most ambitious expansion plan in 12 years at the helm.”

But Reuters’ Neil Unmack says Grant’s “walking away shows discipline. If Syngenta’s management remained aloof, he risked getting tied up in an expensive hostile battle, no easy feat for a global, tax-based deal in a complex sector. And the merger itself would have been a headache, involving breaking up Syngenta and relocating Monsanto in order to get the benefits of a lower tax rate.”

In a piece published before the deal fell apart, the Economistpointed out that “if Monsanto, the world’s biggest seed producer, succeeds in its bid for Syngenta, the largest agrichemicals firm, just five will remain. That inevitably raises worries about whether the reduction in competition will mean less innovation — and thus slower improvements in crop yields — as well as higher costs for farmers.”

Environmental activists framed their worries about a possible merger in different terms. 

“Farmers and scientists intimidated. Groundwater contamination. Human health risks. The decimation of one of America's most iconic wildlife species,” writes Brian Gumm in a blog post for the Center for Effective Government. “These are just some of the problems we've seen thanks to Monsanto, the world's dominant producer of genetically modified crops, and Syngenta, a Swiss chemical company that manufactures controversial agricultural poisons.”

In a news release announcing its rejection of the bid, Syngenta states its mission, in part, in much more benign terms: “Through world class science and innovative crop solutions, our 28,000 people in over 90 countries are working to transform how crops are grown. We are committed to rescuing land from degradation, enhancing biodiversity and revitalizing rural communities.”

And Monsanto says it is “focused on empowering farmers—large and small—to produce more from their land while conserving more of our world's natural resources such as water and energy.”

Indeed, “the proposed deal was somewhat surprising because Monsanto had tried to leave behind its history as a chemical manufacturer and reposition itself as a company promoting ‘sustainable’ agriculture,” write Andrew Pollack and Michael de la Merced for the New York Times. “For instance, some genetically engineered crops make their own toxins to kill insects, potentially reducing the need for spraying insecticides.”

Syngenta claimed in the release that Monsanto “did not provide sufficient clarity” on four issues including “cost and revenue synergies” and “assumptions regarding net sales.” 

Monsanto also intended “to use the deal for Syngenta to redomicile from the U.S. to the U.K., where it would face be able to escape U.S. taxes, in a so-called tax inversion,” point out James Fontanella-Khan and Arash Massoudi in Financial Times. 

Syngenta wanted more clarity on the “assessment of risks and benefits” of that maneuver, as well as the “nature and extent of regulatory covenants” Monsanto was prepared to offer.

Syngenta chairman Michel Demaré maintains that it had “engaged with Monsanto in good faith.” He continues:  “Our board is confident that Syngenta's long-term prospects remain very attractive with a leading portfolio and a promising pipeline of new products and technologies.”

Writing for the Des Moines Register, Christopher Doering says the outcome “was welcomed Wednesday by farmers who feared that a merger between the two competitors would limit seed options and lead to higher prices.” Says Colin Johnson, who farms 700 acres of corn and soybeans in southern Iowa: "The more options we have for companies to work with the better.” 

And Roger Johnson, president of the National Farmers Union, says consolidation “already has left farmers and ranchers ‘at a great disadvantage’” and characterizes Monsanto’s decision to withdraw its bid as “good news for family farmers.”