Monsanto Co., which abandoned its bid to acquire Swiss pesticide maker Syngenta AG in August, said it continues to search for deals because consolidation in the agriculture industry is “inevitable.”
Monsanto pursued Syngenta in the hopes of adding pesticides to its portfolio of genetically modified seeds and Roundup herbicide that are used on 400 million acres globally, Chairman and Chief Executive Officer Hugh Grant said Wednesday on aconference call to discuss fourth-quarter results.
“We’ve seen time and time again that we can increase revenue and improve grower service by bringing chemistry up on that footprint,” Grant said. “Syngenta was the best option, but based on their behavior, that’s gone.”
Monsanto on Aug. 26 withdrew its $46 billion offer to acquire Syngenta, the world’s largest pesticide maker, after the Basel, Switzerland-based company refused to engage in negotiations. Syngenta said the offer didn’t fully reflect its prospects or the antitrust risks.
St. Louis-based Monsanto said Wednesday that abandoning the bid clears the way for $3 billion of share buybacks over six months and a renewed focus on genetically engineered seeds.
“There has been a lot of conversation about Monsanto is pivoting, or you’re changing,” Grant said. “The core strategy remains the same.”
Duplicate R&D
Consolidation would eliminate some of the duplicate research and development efforts in the industry, the CEO said.
“We continue to see the low effectiveness of R&D with some of our competitors, and we continue to think that consolidation in this space is inevitable,” Grant said.
On Wednesday, Monsanto forecast lower earnings for the year that began Sept. 1, missing estimates by analysts. The company plans to eliminate 2,600 jobs as part of a plan save $300 million a year as it tries to double 2014 earnings by 2019 amid a decline in world commodities prices.
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