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 Monsanto, the world's biggest seed company, is keen to know more
about Syngenta's research capabilities, product liability exposure
and the quality of its reported sales, Brett Begemann said in an
interview.
So taking an offer directly to Syngenta shareholders, without seeing
the Swiss company's books, was "not a very compelling idea,"
Begemann said.
"It’s too early to say (we’ve) ruled it out," he added, but any
hostile bid was "a ways out yet."
Syngenta has rejected a $45 billion bid proposal and refused to open
its books, despite the offer of a $2 billion cash payment should
Monsanto examine its business and decide not to proceed with a
transaction.
Earlier this month, Monsanto executives toured Europe to make their
case to Syngenta investors and have now met "the vast majority" of
its 20 largest shareholders, Begemann said.
Monsanto officials declined to comment on how many of those
shareholders had committed to back its pursuit of talks with
Syngenta's board.
On Wednesday, Reuters reported that Henderson Global Investors, a
leading Syngenta investor, had criticized the Swiss company's board
for excluding all but "a very small group" of shareholders from
talks that could determine the fate of Monsanto’s proposal.
If Monsanto does not merge with Syngenta, its alternative will be to
seek out other acquisitions, or establish a series of partnerships
or licensing agreements, to help expand its portfolio of herbicides
and agricultural chemicals, Begemann said.
“There are other alternatives,” Begemann said. For now, he said,
Monsanto remained focused on Syngenta and talking with its
shareholders.
He declined to say which companies Monsanto might approach either
for acquisition or licensing talks, but widespread speculation has
focused on Bayer CropScience and BASF as potential partners.
Monsanto strongly prefers a negotiated deal with Syngenta, in part
because in hostile transactions there is no opportunity to review a
company’s financial records or any proprietary material.
“You find yourself buying a company blind,” Begemann said.
Among other things, Begemann said Monsanto wanted to better
understand Syngenta's perspective about potential legal risks and
ongoing litigation associated with a strain of Syngenta corn called
Agrisure Viptera corn, also known as MIR 162.
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Last year, global grain handlers Cargill Inc [CARG.UL] and Archer
Daniels Midland Co, along with hundreds of farmers, sued Syngenta
for losses allegedly sustained from China's rejection of shipments
of U.S. crops that contained Viptera corn. At the time, the trait
was approved for planting in the United States but not for import by
China, a major corn buyer.
“I’d like to better understand the MIR 162 issues, and their
perspective of how they’re thinking about it,” Begemann said of
Syngenta.
He said he and other Monsanto executives were also concerned about
whether ongoing cost cuts affected Syngenta's research and
development capabilities.
“I just want to be confident that what we’ve seen historically from
their R&D program and the capabilities they have, that those are
still intact,” he said.
The lack of inside information in a hostile deal could add risk to
Monsanto’s plan to sell Syngenta’s seeds business in order to
alleviate anti-trust concerns.
“We would be in the position of selling those seed and trait assets
blind,” Begemann said.
Begemann acknowledged uncertainty about how events will transpire.
"If I knew how the next six weeks, eight weeks played out, and we
were in constructive dialogue, then you look at it very differently
than if we go another six, eight weeks and we still don’t have any
dialogue," he said. "We’ll continue with the conversations we’re
having with their shareholders and see where that goes."
(Reporting by P.J. Huffstutter in St. Louis Additional reporting by
Tom Polansek in Chicago; Editing by Mark Potter)
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