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Mergers & Acquisitions

Seed Industry Shake-up

 4 min read / 

Hugh Grant, Monsanto CEO has been eyeing Syngenta since 2011. Monsanto, the American agrochemical giant, has yet again failed to get a hold of Swiss rival Syngenta, based in Basel. A deal for Syngenta would have allowed Monsanto to further claim its dominant market share in global agribusiness and offer a comprehensive range of seeds and chemicals to farmers around the world. But are there any ulterior motives for the rush?

Monsanto has impatiently been looking to move its global headquarters out of Missouri as part of a tax inversion strategy. Having a Basel-based Monsanto could result in millions in tax savings.Slide1

Compared with other European countries, Switzerland is one of the most attractive locations from a tax point of view. The Swiss have in the past allegedly negotiated special tax status for holding, so-called mixed, and principal companies. Corporate tax rates in these cases can range between 4–11%. Examples of multinationals that may be benefiting from Switzerland’s tax regime include commodities giant Glencore and oil-services company Transocean, both based in Zug, a half an hour’s drive out of Zurich.

Grant is also looking to take advantage of a potential move into Europe to rename Monsanto’s business, which is commonly identified with the use of controversial genetically modified organisms. Since the 1980s, the United States and the European Union have implemented widely divergent regulatory systems to govern the production and consumption of genetically modified agricultural crops. In the US, many products have been tested and commercially produced and marketed. In the EU however, few products have been approved and a de facto moratorium has limited the production, import, and domestic sale of most genetically modified crops. A Europe-based Monsanto could be an effective manoeuver to claim compliance with GMO-averse European regulation.

Syngenta is not impressed

The Swiss agricultural chemicals group rejected a $45bn unsolicited takeover bid from Monsanto in May 2015.

“The offer fundamentally undervalues Syngenta’s prospects and underestimates the significant execution risks, including regulatory and public scrutiny at multiple levels in many countries”

Syngenta, May 2015

Monsanto’s bid had valued Syngenta’s shares at CHF 449 and comprised 45% cash. At the time Syngenta’s share price was hovering CHF 340, which is a generous 30% premium.

No means no

Spurned Monsanto decided to raise its cash-and-stock offer to CHF 470 a share in August 2015. As well as boosting the cash component of the offer, Monsanto increased the break-up fee on the deal from $2bn to $3bn. This was still not enough for Syngenta’s board, who unanimously rejected the revised proposal. Michel Demaré, Chairman of Syngenta, said:

“We engaged with Monsanto in good faith and highlighted those key issues which required more concrete information in order to continue a dialogue.  We take note of Monsanto’s decision.  Our Board is confident that Syngenta’s long-term prospects remain very attractive with a leading portfolio and a promising pipeline of new products and technologies. We are committed to accelerate shareholder value creation.”

Bayer watching closely

German drugs and chemicals group Bayer believes further consolidation in the crop chemicals and seed market is likely.

“It remains to be seen when, in what form and with which partners the consolidation will advance”

Liam Condon, Chief Executive, Bayer CropScience

Bayer, the world’s second-largest crop chemicals provider after Syngenta, declined to comment whether it would seek to play an active role in market consolidation.

Efforts to hush European regulators

Might Syngenta be rejecting Monsanto’s attempts to mask talks it may be having with Bayer? Bayer has quashed rumours of studying a potential acquisition of competitor Syngenta:

“I would say that Syngenta is not a logical acquisition target for Bayer because there is quite some overlap in the businesses”

Marijn Emmanuel Dekkers, Chief Executive Officer, Bayer

Slide2

On the other hand, a combined Syngenta and Bayer would be uniquely positioned to counter the American-dominated seed industry. Culturally, the two European companies are more similar to each other than Monsanto is to Syngenta.

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Companies

Melrose Announces £7.4bn Takeover Bid for Aerospace Firm GKN

 1 min read / 

hostile takeover

Melrose Investments plc has made a formal bid to the shareholders of UK aerospace parts supplier, GKN. The investment firm, which specialises in turning industrial companies around, said the offer followed a formal meeting with GKN’s shareholders.

The £7.4bn offer values the company at 430.1 pence a share but the GKN’s management has said this offer undervalues it. They, in turn, have proposed a plan to separate the company’s train parts from its more profitable aerospace sector.

GKN has had a difficult couple of months. Brexit has created an environment of uncertainty as the company relies heavily on open trade. It fired its incoming CEO in November following a series of write-offs at a plant in Alabama. Some have interpreted Wednesday’s hostile takeover bid as a way to force management back to the negotiating table.

GKN shares have risen 40% since the beginning of the year. In London, shares were trading at 441.20 at midday.

Keep reading |  1 min read

Companies

Google Buys Redux on the Sly

 1 min read / 

Google buys Redux

The tech giant behind Google has bought Redux, a UK startup that specialises in turning phone cases into speakers.

According to regulatory filings, shares from Redux’s holding company NVF Tech Ltd. were transferred over to Alphabet Inc. on the 13th of December last year.

As well as speakers, Redux focuses on providing haptic feedback from surfaces, enabling users to recreate the sense of touch and create objects in virtual simulation.

The technology removes the need to have speakers in phones, freeing up space for bigger batteries or processing power. The acquisition of Redux might suggest Alphabet Inc. will be using the tech in its smartphone, the Pixel, to gain an advantage on Apple, the dominant smartphone provider.

It is unknown when exactly Alphabet Inc. bought Redux as Google has declined to comment on the acquisition.

Keep reading |  1 min read

Companies

Novo’s $3.1bn Takeover Bid for Ablynx Rejected

 2 min read / 

Novo Ablynx Takeover

The Danish pharmaceutical company Novo Nordisk has gone public over a rejected takeover bid of €2.6bn ($3.1bn) for the Belgian biotech firm, Ablynx.

The bid, issued on the 22nd of December, proposed to buy shares in Ablynx at €28 each with a possible €2.50 contingent value right.

Ablynx’s shares, which have been suspended from trading on Monday, had traded at 21.20 at the end of Friday in Brussels. Since the beginning of 2017, share prices in the firm have nearly doubled.

Novo is the world’s biggest manufacturer of insulin, with 80% of sales made up of obesity and diabetes products and up until March this year had stayed away from other areas in the market.

(Source): Google Finance

However, its chief executive, Lars Fruergaard Jorgensen, is looking to expand the company’s product line-up and has already begun developing treatments for rare blood disorders.

Ablynx has recently had a breakthrough with a new drug, still in clinical trials, for the treatment of thrombosis which would complement Novo’s line of products that are focused on haemophilia.

Ablynx, which had already rejected an offer made by Novo on the 14th of December, explained in a statement that its board had “unanimously concluded that the proposal fundamentally undervalues Ablynx and its strong prospects for continued growth and value creation”.

Keep reading |  2 min read

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