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 U.S. seeds giant Monsanto Co. on Wednesday abandoned its pursuit of
its Swiss rival, which had rejected a recently sweetened $47 billion
offer. Syngenta shares fell more than 18 percent on the news.
Shares were up 5.5 percent at 326.8 Swiss francs ($343) at 0837 GMT
on Thursday from Wednesday's close at 309.9 francs.
"If Syngenta's share price remains at current levels of 310 Swiss
francs, that is 40 percent below Monsanto's most recent bid
proposal, the pressure from Syngenta shareholders will arguably
build up quickly to pursue changes that increase value. These could
be announced soon," analysts at Zuercher Kantonalbank wrote in a
note.
Bank of America Merrill Lynch analysts said there was room for share
buybacks at Syngenta. "Syngenta management are likely to be under
pressure to make the situation more palatable with shareholders,"
the brokerage said, pointing to the group saying it was committed to
accelerate shareholder value creation.
Syngenta's management, which has rebuffed Monsanto's repeated
approaches, has said it can create value under its own steam and
that product development and cost-cutting efforts will bear more
fruit than in the past.
The company last month reaffirmed its target for a 24-26 percent
margin on earnings before interest, taxes, depreciation and
amortization (EBITDA) over sales for 2018.
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That is seen by many analysts and investors as a challenge amid weak
agricultural markets in the United States and Brazil, coming from
just 19.3 percent in 2014 and a projected 20 percent for this year.
Syngenta is trying to catch up with rivals, mainly through cost cuts
in its underperforming seeds business. Its closest peer in
pesticides, Bayer's CropScience unit, had an EBITDA margin of
24.8 percent last year and Monsanto's was 29 percent.
(Reporting by Ludwig Burger, editing by David Evans)
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