Ideal media: Global Media- BBC, CNN, Al Jazeera
By: Rebecca Lee Robinson
May 26th, 2015
Controversial U.S. based Monsanto Seed Company is waiting to hear on a $45 billion bid to buy Swiss Syngenta, which would make Monsanto the largest global seed and agricultural company in the world. This merger would give Monsanto control of 54% of the world’s seed and a third of the world’s pesticides. Even with such a compelling bid Syngenta has concerns over Monsanto’s motives and the price they are willing to pay. Syngenta declined a bid made a year ago for $35 billion and are pressuring Monsanto to offer even more to shareholders and the company.
In April it was released that American-based Monsanto would make this current and second bid to Syngenta, which currently holds a $35 billion market price. Monsanto made a bid of $45 billion to Syngenta nine weeks previous and waits to hear a reply from Syngenta. If Syngenta continues to reject the bid, Monsanto is looking to other options to make an offer to Bayer AG. Brett Bergeman, chief operating officer of Monsanto, has claimed that while they’re committed to buying Syngenta it won’t “stay at it forever.”
Monsanto’s goals in buying Syngenta is to attain more rights to agricultural chemicals in order to develop seeds to resist certain pests and weeds from crop development, increasing the ability to produce seeds and being able to spread them quicker to planters and consumers. Syngenta is the largest herbicide, insecticide, and other chemicals producer to control crop-pests. Some analysts are speculating that Monsanto also wishes to move its corporate base to Switzerland where corporate taxes are lower than in the United States. Syngenta is concerned over combining the companies, with anti-trust hurdles and failures to make a fair agreement.
Syngenta has been in discussions with shareholders about a fair-price counter deal to Monsanto. Stockholders, according to Swiss media, have been concerned over a lack of information about the possible takeover. Many stockholders feel that Monsanto needs to raise their bid 10% from $483.4 to $531.74 per share. Syngenta wants a fair price offer and feels Monsanto is trying to buy them “on the cheap”. The board at Syngenta rejected the initial proposal and would only consider the current proposal if Monsanto offered higher compensation and more certainty for shareholders if the deal fails for anti-trust or other reasons.
Syngenta chairman Michel Demare discussed in a video interview the future for his shareholders to gain a profit if Monsanto takes over. He discussed that Monsanto would essentially be dismantling Syngenta and building it new. Demare feels that Syngenta, though they have not met predictions in the last few years, are on track to have shareholder profits this year and continue to increase as an independent company. Demare also stated concerns on making a giant agricultural company and its impact on integrated farmers that already work with Syngenta.
Many are concerned about the large mergers and take overs of these chemical companies. If Monsanto and Syngenta merged, it would leave only 5 large global seed and chemical players controlling a majority of agricultural supplies. As the economy is still rocky, Monsanto and other companies are merging and buying out others quickly. Monsanto’s recent actions also indicate its interest in other areas such as information technology around agriculture, as it has invested in weather monitoring equipment, and has made it a common practice to follow their seeds from planting to death. According to a May 2015 ETA article “When a single corporation sells the seed, knows the prevalence of pests and sells the pesticide, knows the local soil conditions, then divvies up the fertilizer, predicts the weather at harvest and sells the crop insurance, the notion of cross-sector (and antitrust) begins to lose meaning.” Monsanto has also been under fire for lobbying politicians while pushing out smaller agricultural businesses who can’t afford advertising and lobbying budgets.
Beyond corporate control the World Health Organization is suspicious of Monsanto’s Round-Up weed killer being a possible carcinogen. Along with many Monsanto Genetically Modified seeds, which are meant to decrease the use of chemical fertilizers, pesticides and labor, are proving to be less effective than in previous years. As diseases and pests become more resistant to the seeds, farmers are having a hard time producing and therefore are buying less seed form Monsanto. The Union of Concerned Scientists list many of these concerns as also causing more environmental damage and creating more problems for already fragile ecosystems around the world.