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Monsanto Says It Would Divest Syngenta Seed Business Upon Takeover

In a move to gain regulatory approval for a takeover of its Swiss rival, Syngenta, Monsanto has stated it would divest Syngenta AG’s seed and genetic traits business in addition to various overlapping chemical assets.

Monsanto president, Brett Begemann, stated in a presentation to investors that the company is confident that it can address all concerns regarding the combining of the two global giants, adding, “We intend to make this a really clean deal…really easy to get done.”

Syngenta has recently rejected Monsanto’s offer of $45 billion for the group, but negotiations are continuing. Syngenta executives have expressed that they believe that Monsanto’s divestment plans will not be sufficient to gain approval from regulators, stating that the regulatory challenges are greater than Monsanto is admitting.

Acquiring Syngenta would be a strategic maneuver for Monsanto, as the company is facing increasing push-back from both regulators and consumers regarding its key Roundup herbicide and biotech seeds - which contribute approximately 70% of Monsanto’s earnings before interest and tax - as weeds become more resistant to glyphosate, and consumers are becoming more wary of glyphosate-tolerant crops. If Monsanto is successful in a takeover of Syngenta, it would give the group a broader, more diversified portfolio of insecticides, herbicides, and fungicides, at a time when it could take a decade and $200 to $300 million to develop only one new agrichemical.

Syngenta’s agri-chemical portfolio posted revenues of $11.3 billion in 2014, compared to $5.1 billion for Monsanto’s herbicides, although both companies saw total revenues exceed $15 billion last year.

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