US agribusiness Monsanto, which has renewed its bid for Swiss rival Syngenta with an unsolicited US$45bn cash and shares offer, is tying the potential acquisition to a tax inversion strategy according to the
The business daily reports that in the event of the bid ultimately succeeding, the merged group would re-domicile in the UK to reduce its tax bill.
Monsanto would “also propose a new name for the combined company to reflect its unique global nature,” wrote Hugh Grant, Monsanto’s chief executive (CEO) to Syngenta’s board says the
The US group originally approached Syngenta in April with an offer, which the Swiss company rejected as “grossly inadequate”. Its revised offer is worth about US$447 per share, a premium of more than 45% over Syngenta’s 52-week average share price.
Monsanto also claims that merging the US group’s leading seeds business with Syngenta’s dominant position in agricultural chemicals would create “significant value for growers and consumers”.
However, reports suggest that Syngenta’s board members are worried about the regulatory hurdles a potential merger would bring, considering the combined companies would control nearly half the seeds market in the US. Monsanto has responded by adding a US$2bn reverse breakup fee that it would pay Syngenta if anti-trust issues were to scupper the deal.
A further concern, according to reports, is the “regulatory scrutiny and consumer backlash” that the US group faces globally.
Monsanto’s plans for a tax inversion deal is also likely to encounter political opposition in the US. In April, US Senator Dick Durbin urged Monsanto not to use a deal to move its tax domicile overseas.
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