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The Year in Brief: Monsanto layoffs loom, purchases possible as industry consolidates



In brief

It has been a rocky year for Monsanto, the world’s largest seed maker. Following a series of unsuccessful bids to buy Swiss agrochemical company Syngenta AG, the Creve Coeur-based agribusiness outfit is trying again.

Syngenta is in talks with Monsanto, the Chinese agribusiness company ChemChina and other rivals, but the Swiss firm has not received a concrete takeover offer in the latest round of negotiations, Syngenta Chairman Michel Demare told a Swiss newspaper.


The Year in Brief offers a look at Missouri’s most important business stories of 2015 and previews how those stories could play out in 2016 and beyond. 


Monsanto pursued an acquisition for months earlier in the year, making three separate offers to buy Syngenta. The Creve Coeur-based company even proposed moving its legal headquarters overseas and changing its name to make the deal work. Its latest offer of nearly $47 billion was still insufficient for Syngenta, and Monsanto abandoned its takeover bid in August.

In the future

Industry consolidation and internal cost cutting are likely to be dual drivers of Monsanto’s decisions in 2016 and beyond.

The company’s chief executive, Hugh Grant, suggested as much in October, when Monsanto announced it would lay off 2,600 employees over 18 to 24 months. The job cuts are part of an effort to save $300 million and double 2014 earnings per share by 2019. Despite Monsanto’s failure to strike a deal with Syngenta, Grant noted his company would continue to seek acquisitions, calling industry consolidation “inevitable.”

With rivals DuPont and Dow Chemical announcing a $130 billion merger in December, speculation about potential acquisitions by Monsanto has only increased.

Two PipperJaffray analysts suggested Monsanto could purchase Bayer CropScience — which has said it’s not interested in being bought — or look to be acquired by Bayer. The analysts also cautioned that Monsanto making another bid for Syngenta could be viewed negatively by investors, as an increased offer would hinder the company’s stock buyback efforts.

In a graphic

Monsanto-Graphic

 

In a tweet

In July, after Syngenta turned down a second buyout offer by Monsanto, the Swiss company shared an interview with its chairman, Michael Demare, discussing the rationale for that decision:

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