Syngenta breathed new life into the recovery of its shares, which tumbled after Monsanto pulled a bid, by unveiling a $2bn share buyback and the sale of its vegetable seeds business, in an effort to "accelerate shareholder value creation".
Shares in the Swiss-based group, the world's biggest agrichemicals company, rose 3.6% to SFr338.50 in morning deals, resuming a price revival from the six-month low of SFr305.30 set last week after Monsanto ditched its $46bn takeover plans.
The price gain followed the announcement by Syngenta of "actions to accelerate… value creation" for investors, who had seen, with Monsanto's interest, the potential to gain a price of SFr470 a share for their holdings.
The group's go-it-alone strategy for raising shareholder value will involve "a number of" initiatives, including efforts to boost profitability and "strategic partnerships", Syngenta said.
Indeed, besides unveiling an "initial" share buyback of "more than" $2bn, which had largely been expected by analysts, the company also revealed the sale of its vegetables seeds business, which covers crops such as cucumbers, peppers and sweet corn.
"This industry-leading, high margin business has a significant global footprint and a wide array of best-in-class varieties," Syngenta said.
"As such, it is expected to attract significant third-party interest."
Indeed, the group heralded the potential for a rich sale price which could raise the argument for a higher stockmarket rating for its seeds operations as a whole.
"By demonstrating and unlocking the inherent worth of our leading global seeds portfolio, we can create significant additional value," said Mike Mack, the Syngenta chief executive.
A sale –which would follow the disposal two years ago of the Dulcinea melons business, which fell within the vegetables division – would mean Syngenta quitting a business which achieved sales of $663m in 2014.
Total group sales for the year were $15.1bn, of which $3.2bn were in seeds.
Adjusted as a proportion of sales, the Monsanto bid for the group would imply a $2bn valuation for the vegetable seeds business, although this is very much a back-of-the-envelope figure and Syngenta's claim of high margins could, for instance, warrant a higher figure.
However, the disposal also raises a question over the group's strategy of merging seeds and agrichemicals operations in an effort to reap extra business from offering integrated products.
Syngenta said in its annual report, on vegetables, that "we use our strength across genetics, chemicals and biological controls to develop integrated crop management programmes, which improve the sustainability and productivity of vegetable production".
The group took $1.08bn last year in sales of agrichemicals to vegetable-growing customers.
Mr Mack on Thursday stood by ideas that reforms including its seeds-and-sprays integration strategy, and cost cuts already announced, would see the group hit a margin target of 24-26% by 2018.
By Mike Verdin