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Syngenta shares rise after Mack quits as CEO

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Shares in Syngenta rebounded 5% after the agrichemical giant revealed the resignation of its chief executive, Mike Mack, weeks after group summarily rejected a bid from Monsanto, attracting the ire of some investors.

Mike Mack, a US citizen and Harvard University MBA graduate, is to quit Syngenta at the end of October after nearly 14 years at the group, the last seven as chief executive.

"I believe that this is an appropriate time for the company to benefit from the perspectives of a new leader," he said.

His resignation comes two months after Monsanto pulled a $47bn bid, in cash and shares, for the Swiss-based group citing a "lack of a constructive engagement from Syngenta".

The withdrawal of the proposal, worth SFr433 per Syngenta share at the time it was ditched, sent the stock tumbling to as low as SFr288.50 last week, their lowest since January.

The stock on Wednesday touched SFr327.40, a gain of 5.6% on the day, adding some SFr1.6bn ($1.7bn) to Syngenta's stockmarket value. forecast in May that Monsanto's bid for Syngenta, the latest in a series of overtures, would this time draw blood in the boardroom.

'Fraught with execution risk'

Syngenta rejected the bid on grounds that it "significantly undervalued the company and was fraught with execution risk", with particular concerns over the regulatory interest that a merger of two groups with such large shares in global seed and sprays markets would attract.

The group has, since the deal collapsed, announced a series of moves, such as the potential sale of its vegetable seeds business and a $2bn share buyback, aimed at supporting returns to shareholders.

However, the initiatives failed to win over many investors who were angered at Syngenta's failure to land a Monsanto deal which offered a rare chance for a windfall in an agrichemicals sector struggling with deep cuts to farmers' budgets thanks to lower crop prices.

Syngenta on Thursday became the latest of a series of agrichemicals groups to unveil disappointing results, and reduce profits hopes, citing in particular setbacks in Brazil, where the weak real has stemmed demand for dollar-denominated inputs such as sprays.

'Multitude of missed opportunities'

On Friday, a group terming itself the Alliance of Critical Syngenta Shareholders, which claims the support of more than 80 investors, wrote to Michel Demare, the Syngenta chairman, urging a "full and comprehensive strategic review" at the group, which the alliance said appeared to be showing "both a lack of strategic direction and failure to consistently execute".

The group noted "a multitude of missed opportunities to deliver value, the ongoing gradual erosion of market share, and the loss of over SFr10bn in market value resulting from the rejection of Monsanto's offer without meaningful negotiations".

It also cited the "botched launch" of MIR-162, a genetically modified corn variety which was released in the US without having received regulatory clearance in Beijing, and heralded the rejection by China of a series of corn imports from the US.

The alliance on Wednesday welcomed Mr Mack's resignation, saying that Syngenta "must now appoint a new chief executive who will address past mistakes and impartially examine all options to exploit the full potential" of the group.

"We also expect the new chief executive establish a new, open communications culture - not least in dealing with investors and shareholders."

External candidates?

Separately, analysts at Bernstein said that "the possibility of a new chief executive will be welcomed by investors, as it gives the chance for the company to appoint a more restructuring-focused chief executive,".

The candidate was "likely to be an external hire", Bernstein added.

Kepler Cheuvreux said that "in our view, it would be best to appoint an industry insider - but outside person - with a fresh viewpoint on Syngenta".

The chief executive position will be held on an interim basis by John Ramsay, the Syngenta chief financial officer.

Mr Mack, formerly at Imerys, a French mining and minerals group, joined the Syngenta in 2002 as head of crop protection in North America, before becoming chief operating officer in seeds, a positin he held until becoming chief executive at the start of 2008.

By Mike Verdin

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