Reporting by Mike Stone, Alice Baghdjian, Oliver Hirt, Ruppert Pretterklieber, Simon Jessop and Nishant Kumar. Writing by Ludwig Burger and Alice Baghdjian
Monsanto is hosting meetings across Europe to woo shareholders in Syngenta after the Swiss seed and crop chemical firm recently rejected a second takeover approach from its U.S. rival.
Monsanto's initial approach was rebuffed by Syngenta in May partly on the grounds it did not address regulatory concerns. The U.S. firm said it had offered to pay Syngenta $2 billion if the merger failed to get approval from regulators, but this was rejected as "wholly inadequate".
The meetings with Syngenta shareholders being arranged by Monsanto are scheduled for the second week of June in London, Zurich and other European cities, according to people familiar with the matter.
The U.S. company's Chief Operating Officer Brett Begemann, for instance, is down to meet Syngenta investors at a Zurich luxury hotel on Tuesday, June 9 one of the sources said.
"The objective is to convince shareholders of Syngenta to pressure the company to negotiate with Monsanto," said another source.
The person said Monsanto would be hesitant to take an official offer to shareholders sidestepping Syngenta management, because it would have to organize the sale of businesses for anti-trust reasons without having control over the target.
Monsanto declined to comment.
In a June 6 letter to Syngenta management published by Monsanto, the U.S. company's Chief Executive Hugh Grant said he wanted to "reinforce my personal disappointment with the pace of progress in what we seek to be a constructive, good-faith process to negotiate a mutually beneficial transaction".
The stock market has been dubious about the likelihood of a deal succeeding, with shares in Syngenta 1.3% lower at 407.4 Swiss francs on Monday. The original proposal from Monsanto valued Syngenta shares at 449 francs.
Syngenta was dismissive of Monsanto's second approach, which added the $2 billion regulatory break-up fee proposal to the original offer terms.
"Monsanto's second letter represents the same inadequate price, same inadequate regulatory undertakings to close, same regulatory risks and same issues associated with dual headquarters' moves," Syngenta said in a statement.
"The only change by Monsanto is to add a wholly inadequate reverse regulatory break fee."
Monsanto, the world's largest seed company, faces mounting threats from both regulatory scrutiny and consumer opposition. A drive by the producer of Roundup herbicide to diversify its business is making Syngenta a compelling target, analysts say.
If Monsanto takes over Syngenta, it would gain a broad portfolio of fungicides, insecticides and other herbicides.
Some investors agreed that Monsanto would need to put more on the table to have any chance of landing Syngenta.
"A higher price improves the risk-reward profile for Syngenta shareholders, but I would also like to see greater commitment to regulatory undertakings and a higher break fee," said John Melsom, chief investment officer of the event driven hedge fund at London-based Omni Partners.
Mark Denham, European equities fund manager at Aviva Investors, highlighted the risk of Monsanto's plan to sell Syngenta's seeds business, which would mean unravel its strategy of managing seeds and pesticides product lines as one.
"Let's say we were to go through the deal and it were to fall at the last minute, that would be hugely disruptive for that business model. So I agree that the $2 billion break-up fee does look a little low."