Monsanto Says it Still Wants Syngenta; Profit Beats Estimate
Monsanto announced it will be cutting costs and reducing its operating spending by between $300 million and $500 million by the end of fiscal year 2017. The announcement is indicative of the company’s more tempered and cautious financial outlook as the company is faced with reduced seeding rates due to low commodity prices, weak foreign currencies, and market pressure from generic versions of its RoundUp herbicide.
Despite third quarter profits exceeding expectations, shares in the company fell by 4% upon the news that it will likely break even in the fourth quarter and the announcement of its more reserved fiscal outlook, and the standstill in its pursuit of acquiring its rival, Syngenta.
Although Syngenta has refused Monsanto’s latest takeover offer of $45 billion saying the offer is undervalued and citing daunting anti-trust hurdles, Monsanto is still interested in a successful deal being completed, saying the combination of the two companies would create vast cost savings and growth opportunities.
To overcome any antitrust issues, Monsanto said it would divest all of Syngenta’s seed and trait lines, and its competing chemical offerings claiming that buyer interest is already ‘extraordinary’.
In spite of its willingness, Monsanto has also stated that it will not let the Syngenta negotiations turn into “an epic struggle”, and that if a deal doesn’t solidify with months it will pursue other opportunities. Company officials have stated that they are also considering a $1 billion investment into a Louisiana-based dicamba herbicide production plant.