US agribusiness Monsanto has dropped its attempt to buy Swiss agrochemicals firm Syngenta. The decision comes after the latter rejected a sweetened offer, valuing it at around $47bn (£29.9bn, €40.9bn).
Monsanto (NYSE: MON) noted that while it continues to believe a combination with Syngenta would be of "tremendous value" for shareowners of both companies, Syngenta said the enhanced proposal did not meet Syngenta's financial expectations. In a bid to lure Syngenta to the negotiating table, Monsanto earlier raised its offer to CHF 470 (£318.11, €434.88, $499.84) per share from CHF 449 per share.
"Without a basis for constructive engagement from Syngenta, Monsanto will continue to focus on its growth opportunities built on its existing core business to deliver the next wave of transformational solutions for agriculture," the company said. "Monsanto will continue its focus on opportunities within its existing core business and resume the implementation of its approved share repurchase program as soon as practical."
The company said the shareowners of the combined company would have benefited from substantial synergies, significant cash earnings per share accretion and attractive return on capital, as well as a responsible capital structure. It added it is confident that it would deliver its five-year plan to more than double fiscal-year 2014's ongoing earnings per share by 2019.
Monsanto's sweetened offer increased the cash component of the proposed transaction to CHF 245 per share. The proposal also maintained the same number of shares as in its April proposal, providing Syngenta shareowners with an approximate 30% ownership in the new company. Monsanto also increased the size of a break-fee payable to Syngenta to $3bn in case an agreed deal was blocked by regulators.
Meanwhile, Syngenta rejected the revised offer, saying it "significantly undervalued the company and was fraught with execution risk." "Furthermore, recent market volatility highlighted the significant risk for Syngenta shareholders resulting from the structure of this proposal," the company added.
Syngenta noted that Monsanto did not provide sufficient clarity on the total cost and revenue synergies, net sales proceeds of seeds and traits and risks and benefits from a tax inversion to the UK. Syngenta shares in Switzerland closed down more than 18% after the news.
"We engaged with Monsanto in good faith and highlighted those key issues which required more concrete information in order to continue a dialogue," Michel Demaré, chairman of Syngenta said in a response to Monsanto's decision. "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. We are committed to accelerate shareholder value creation."