Monsanto (MON), Syngenta (SYT) Deal Seen as One Step Closer - Deutsche Bank

Deutsche Bank maintained a Buy rating on Syngenta (NYSE: SYT) with a price target of CHF450. Analyst Virginie Boucher-Ferte said the likelihood of a deal with Monsanto (NYSE: MON) is increasing.

Earlier Monsanto' COO Brett Begemann said, "in conjunction with its financial and legal advisors, the company has devoted significant time and resources to analyzing a potential combination of Syngenta and Monsanto and remains confident in its ability to address regulatory concerns. This includes the company’s commitment to divest all of Syngenta’s seeds and traits assets and certain overlapping chemistry assets, making Monsanto better positioned than anyone in the industry to create a new company committed to integrated, value added solutions and enabling continued choice in the seed industry. Further, the proceeds from the planned divestitures would create a source of cash to allow the combined company to have a responsible capital structure post-close."

Boucher-Ferte commented on the news, saying, "We already thought that the odds of the deal going through were relatively high but this new information increases the likelihood as: 1) it shows Monsanto's determination; 2) antitrust risks would be materially lowered if Monsanto were to sell the entire seeds business and some chemistry and 3) the deal would be easier to digest than initially thought given the extent of the disposals. Assuming the deal is 50/50 cash/equity financed and a revised acquisition price of CHF 500/share, we calculate a net debt/EBITDA ratio for Monsanto of c2x in Y1 which we see as acceptable given the free cashflow generation potential of the company."

For an analyst ratings summary and ratings history on Syngenta click here. For more ratings news on Syngenta click here.

Shares of Syngenta closed at $87.23 yesterday.

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