Syngenta sees growth ahead without Monsanto merger

Syngenta, the world’s biggest agrochemicals company, sees plenty of growth ahead aided by a strong pipeline of new products without having to merge with seeds giant Monsanto.

The Swiss group has rejected a US$45bn (£28bn) takeover offer from its US rival, saying the price is too low and the deal too risky as it would struggle to clear anti-monopoly regulators.

See also: Monsanto offers name change to secure Syngenta takeover

James Barkhouse, head of Syngenta’s north Europe region, says the group’s sales growth and strong pipeline back up its dismissal of Monsanto “unwanted” advance.

“Our top line sales growth gives us cause for confidence for the future as an independent company built on growth in emerging markets and new products,” he tells Farmers Weekly.

Syngenta results

The group reported underlying sales growth of 3% in the first half of 2015 to $7.6bn (£4.8bn) and operating profits up 21% at $2bn (£1.28bn) last week, when stripping out currency fluctuations, despite a dip in commodity prices and low farm incomes.

Mr Barkhouse points to a pipeline as good as the group has ever seen, with products launched in the past two years and still to hit the market having peak annual sales of more than $6bn (£3.84bn).

These include an SDHI fungicide wheat seed treatment containing sedaxane, which is hoped to be launched in the UK during 2016, and also foliar SDHI fungicide Elatus (solatenol) expected in 2017.

Monsanto, which sells glyphosate herbicide Roundup and oilseed rape varieties such as Extrovert and Exalte, is keen to combine its world-leading seeds business with Syngenta to create a global leader in both pesticides and seeds.

Syngenta, which sells fungicides such as Seguris and Bravo and winter wheat varieties Reflection and Gallant, is already number one globally in pesticides and third in seeds.

“We said no in 2011, we said no in 2012, we said no in 2015. What part of no don’t they understand?”
Michael Mack, Syngenta chief executive

The overlaps of the two businesses and the creation of a group with over $30 billion in annual sales has put risks over a possible deal being completed.

“This has got a real and tangible risk of not getting through the regulators,” Mr Barkhouse says.

A successful deal would need big divestments and there is a real risk of too much power in the hands of a single organisation, with a combined group likely to account for 30-40% of the agricultural inputs in certain markets, he adds.

Analysts have speculated that Monsanto would be forced to sell Syngenta’s seeds business to get through regulators’ scrutiny, but Mr Barkhouse sees simply too much risk in a deal.

The Swiss group, the result of Novartis and AstraZeneca (the latter including the old ICI business) pairing up their agribusinesses in 2000, has seen average annual sales growth of 6-7% since its creation, until a slowdown this year.

Monsanto made its $45bn (£28.8bn) approach to Syngenta in April, then added a $2bn (£1.28bn) break fee to that amount in June to be paid to Syngenta if a deal was blocked by the regulators.

This move followed earlier approaches by Monsanto made in 2011 and 2012 which Syngenta rejected, and prompted a sharp response from Syngenta’s chief executive Michael Mack.

“We said no in 2011, we said no in 2012, we said no in 2015. What part of no don’t they understand?” Mr Mack said last week.