By: Jack Kaskey

Monsanto Co. is prepared to pay a $2 billion break-up fee should its $45 billion takeover bid for Syngenta AG fail as it presses to jumpstart talks on combining its leading franchise for genetically modified seeds with the world’s largest maker of agricultural chemicals.

The break-up fee would be payable if Monsanto is unable to obtain global regulatory approvals, the company said in a statement. Monsanto reiterated that it would sell all overlapping businesses and that it’s “confident” it can obtain needed clearances.

Syngenta on May 8 rejected an unsolicited offer of 449 francs a share, with 45 percent in cash, saying it undervalued the company and doesn’t sufficiently compensate for antitrust risks. Syngenta would consider entering talks if Monsanto raises its offer and adds a multibillion-dollar termination fee, people with knowledge of the situation said last week.

Basel, Switzerland-based Syngenta considers a termination fee around 10 percent of the purchase price, or $4.5 billion at the current bid, as reasonable, one of the people said, though no concrete amount had been set.

Monsanto, based in St. Louis, has agreed to sell Syngenta’s seed and genetically engineered traits as well as any overlapping crop chemicals to win regulatory approval. Chemicals that would be sold include Syngenta’s glyphosate and acetochlor herbicides, a person with knowledge of the matter said last week.

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“It is disappointing that Syngenta has not engaged in substantive discussions about the many benefits of this combination, including the benefits for farmers around the world,” Monsanto Chairman and Chief Executive Officer Hugh Grant said in the statement. Monsanto is committed to “pursuing constructive conversation with Syngenta’s management and board,” he said.

Monsanto’s bid represented a 43 percent premium to Syngenta’s share price at the close on April 30, just before Bloomberg News reported the proposal.

Syngenta shares have climbed 31 percent since April 30 while Monsanto has slipped 0.1 percent.

Originally Published: Bloomberg