Selling seeds and pesticides used to be a sleepy, slow-moving business. That was, until about 20 years ago, when the chemical company Monsanto introduced genetically modified crops and started buying up seed companies. Ever since, companies in this industry have been maneuvering like hungry fish in a pond, occasionally dining on pieces of each other, hoping to survive through size and speed.
Monsanto, now the world's biggest seed company, is attempting its biggest bite ever. It wants to acquire Syngenta, a Switzerland-based company that sells pesticides and seeds, for $45 billion. Syngenta is currently the world's biggest seller of agricultural chemicals, and it is ranked third in seed sales.
Syngenta has rejected the deal, at least for now. The European company says Monsanto is offering a "grossly inadequate" price. It is also wary of pursuing a deal that government regulators in some parts of the world might end up blocking. The company also says it worries about the "reputational risk" of combining with Monsanto — implying that Monsanto is the corporate equivalent of a high school boy who's not cool.
In fact, a dose of cultural and personal animosity does appear to stand in the way of a deal. This past week, Syngenta took the unusual step of publicly releasing two letters in which Monsanto's CEO, Hugh Grant, made his case for a merger. In the first letter, Grant had expressly asked that the offer be "kept strictly confidential."
"I've been watching this with fascination," says John Sorenson, the former president of Syngenta's global biotechnology division. Sorenson now is CEO of a startup company in Kalamazoo, Mich., called Vestaron. He says that his former employer fits the European stereotype: hierarchical in structure, deliberate in making decisions, sometimes slow-moving. Monsanto, on the other hand, is "very American — Wild West." It has been aggressive, nimble, and single-minded. As a result, it is also widely reviled.
"Can you imagine them merging?" I ask.
"No!" Sorenson says, with a laugh. "But I would not underestimate Monsanto." When Monsanto pursues something, he says, "it's relentless."
"Ultimately, it comes down to price," Sorenson says. If Monsanto offers enough money, Syngenta's shareholders will make sure the sale goes through. Sorenson says if he were forced to place a bet, he'd estimate the chance of a deal at about 60 percent.
To preserve competition in the seed industry, and make the deal more palatable to antitrust regulators, Monsanto is promising to sell off Syngenta's seed business. It is also proposing to move the combined company's headquarters to London and to adopt a new name.
Dropping the Monsanto name might not be a bad move. One attempt to measure the reputations of 100 top companies, conducted by Harris Interactive, ranked Monsanto fourth from the bottom.