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Monsanto still keen on deals - maybe even with Syngenta

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Monsanto said that it remained keen on a tie-up, even after the failure of its $46bn bid last year for Syngenta – indeed, saying that this tie-up only looked more appealing given "tougher" industry conditions.

Hugh Grant, the Monsanto chief executive, said that the merger of by rivals DuPont and Dow Chemical of their seeds and agrichemicals units, as announced last month, had not marked the end of the deal wave in the sector.

"We expect industry consolidation to continue, and it should given the opportunities for significant synergies and value creation in research and development across the industry," Hugh Grant, the Monsanto chief executive, said, underlining the pressure on groups from weaker customer profitability.

"I think there's going to continue to be consolidation in this space when you see what's happening with commodity prices today."

'More important now'

Monsanto itself "will continue to have a role in being a consolidator", said Mr Grant who, while failing to reveal any talks in progress, said that a deal with Syngenta, which it withdrew after the Swiss group rejected talks, made even more sense than it did at the time.

"The belief that we had last April we still have, that there is a significant opportunity there for the integrated [Monsanto-Syngenta] platform," Mr Grant told investors.

"Frankly as the industry goes through challenges I think that opportunity becomes even greater.

"A lot has changed in the industry since last spring. The industry has gotten tougher. The operating environment has become tougher as well.

"So the engagement becomes more important now than it did before with Syngenta."

'Engagement has been difficult'

However, Mr Grant hinted that a deal with Syngenta, which Monsanto has cherished for years, holding talks in 2014 over a deal which would have moved the US group's tax location to Switzerland, was not in the offing.

"We haven't seen much progress on that front," he said, in comments after Monsanto cut its full-year earnings forecast, despite reporting a smaller-than-expected loss for the September-to-November quarter.

"I'd say that engagement has been difficult."

'Intense negotiations'

A tie-up between the two groups would marry what is, in Monsanto, currently the biggest seeds group, with a relatively small presence in agrichemicals, with, in Syngenta, the leader in farm sprays, earning a far smaller proportion of its revenues from seeds.

Nonetheless, Syngenta spurned Monsanto's approach last year in part over concerns of the antitrust attention that a tie-up would bring.

Syngenta - which saw its shares tumble, and ditched Mike Mack as chief executive, after the failure of the Monsanto approach – has more recently said that it is involved in consolidation talks with unnamed partners.

Michel Demare, the Syngenta chairman, said last month that the group was in "advanced, formal and intense negotiations".

By Mike Verdin

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