Monsanto (MON), Syngenta (SYT) Antitrust Issues Wouldn't be Insurmountable - Deutsche Bank

May 1, 2015 7:35 AM EDT
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Deutsche Bank analyst Virginie Boucher-Ferte thinks antitrust issues regarding a potential Monsanto (NYSE: MON) and Syngenta (NYSE: SYT) combination would not be "insurmountable." Yesterday shares of Syngenta surged after Bloomberg reported that Monsanto has once again approached the company about a takeover.

"Although MON is global #1 in seeds and Syngenta #3, Syngenta’s mkt share is relatively small at c8% vs. c25% for MON. Even if there would undoubtedly be some antitrust issues in some countries/regions for some crops (seeds is a regional market), we note Syngenta’s seeds business is currently perceived as the weak spot‚ 'stained' by recent problems in its US corn business. Therefore, if some of Syngenta’s seeds assets had to be divested as a pre requisite for a deal, we don’t think the market would see it as a problem," said Boucher-Ferte.

"We believe such a move would make long-term strategic sense for Monsanto," continued the analyst. "It would: (i) provide MON with a leading branded crop protection franchise (Syngenta is #1 in CP), as the company is currently only focusing on non-selective herbicide glyphosate which is facing growing competition and resistance issues, (ii) Bolster MON’s long-term growth potential given GM penetration rates are already high in Americas and organic growth has slowed recently; (iii) Give MON access to best in-class resistance mgmt programmes. (iv) Enlarge MON’s ‘’bundling’’ potential with Dicamba manufacturing being of particular interest. Financially, we believe MON could afford Syngenta however it would need to suspend its recently announced share buyback programme."

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 $67.04 yesterday.

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