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World/Americas: Monsanto mulled takeover of Swiss rival Syngenta to avoid US corporate taxes

25 June 2014   (0 Comments)
Posted by: Author: Aaron Kirchfeld
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Authors: Aaron Kirchfeld, Andrew Noel and Patrick Winters (BDlive)

The desire to avoid US corporate taxes has now spread to agricultural giants — as a dead deal shows.

Monsanto, the world’s largest seed company worth $64bn, recently explored a takeover of $34bn Swiss rival Syngenta in a transaction that would have allowed the US firm to move its tax location to Switzerland.

The deal, which is now defunct according to people familiar with the matter, is another sign of how US firms are trying to avoid corporate taxes by moving their headquarters overseas. US drugmaker Pfizer pursued UK-based AstraZeneca, offering as much as $117bn before abandoning the deal, while North Chicago, Illinois-based AbbVie is chasing Dublin-based Shire for $46.5bn.

Monsanto and Syngenta held preliminary talks with advisers in the past few months about a combination before Syngenta’s management decided against negotiations, said the people, who asked not to be identified. Company officials also spoke informally with each other about a potential deal, two of the people said.

There were concerns about the strategic fit, antitrust issues and relocating the firm to Switzerland for tax reasons, they said.

The talks, which valued Syngenta at more than $40bn, fizzled out late last month, one of the people said. An additional concern was that US politicians would close the inversion loophole, thereby removing that benefit, another person said.

Syngenta shares surged as much as 7% in Swiss trading on Tuesday. Before on Tuesday, the stock had underperformed peers in the past two years and declined about 8% last year.

Monsanto on Tuesday was almost unchanged in New York, for an advance this year of 4.8%.

Combining the two companies would have created the largest player in the world for both seeds and crop chemicals and a formidable competitor to German rivals Bayer and BASF and Dow Chemical in the US.

Syngenta is the world’s largest maker of crop chemicals and strongest in Europe, whereas Monsanto is the largest maker of seeds and dominates the US market for genetically modified crops like maize and soybeans.

"Investors would love it, it would create by far the world’s biggest agricultural technology company," Bank Vontobel analyst Patrick Rafaisz said, adding that it would be a surprise if they pulled off such a deal.

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