Photographer: Brent Stirton/Getty Images

Monsanto Still Has Heart Set on Biggest Chemical Deal: Real M&A

Updated on

Monsanto Co. is willing to give the biggest acquisition in the chemical industry -- and one of the more expensive -- another shot.

The $54 billion U.S. seed company has approached Syngenta AG about a takeover almost a year after the two broke off merger talks, according to people familiar with the matter. With Syngenta valued at $31 billion as of Thursday, a deal would be the largest ever struck for a chemical maker, even before accounting for a takeover premium.

The biggest deal targeting a chemical producer to date was the combination of Hoechst and Rhone-Poulenc SA, a more than $20 billion deal that created drugmaker Aventis SA in 1999. The largest transaction among agricultural-chemical makers was the merger between Russian potash producers OAO Uralkali and OAO Silvinit in 2011, valued at less than $10 billion.

Syngenta was valued Thursday at about 12.5 times its earnings before interest, taxes, depreciation and amortization in the last 12 months. Large chemical companies purchased in the last decade have commanded a median multiple of about 9 times, so a purchase of Syngenta would also rank as one of the industry’s more expensive deals, according to data compiled by Bloomberg.

On Friday, Syngenta’s American depositary receipts gained 13 percent to $76 at 9:43 a.m. in New York.

Monsanto in June announced a $10 billion share repurchase plan that it funded with debt. That reduced the company’s financial flexibility and it will need to issue more equity to fund a takeover of Syngenta without broaching its stated leverage limits, according to an analysis by Richard Bourke and Jason Miner of Bloomberg Intelligence.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE