Monsanto Doesn't Need Syngenta
Stephen Simpson, CFA
Stephen Simpson, CFA
Monsanto: A Very Compelling Long Opportunity Rarely Seen In Large Caps
Alpha Gen Capital • 163 Comments
Alpha Gen Capital • 163 Comments
Fri, Mar. 4, 2:23 PM
- Monsanto (MON +1.2%) is higher despite a Goldman Sachs downgrade to Sell from Neutral with a $84 price target, trimmed from $86, seeing weakness in currently oversupplied ag markets likely to persist for the foreseeable future.
- The firm says MON’s target of 20%-plus EPS compound annual growth rate for FY 2017-19 could come under pressure due to poor farmer economics, elevated grain inventories and “recent company-acknowledged linkage between earnings growth rates and stagnant corn pricing (driven by oversupply)."
- Goldman's Sell recommendation comes even as most of Wall Street - including Deutsche Bank, Credit Suisse, Atlantic, Piper Jaffray, Canaccord, Morgan Stanley, UBS and Citi - has maintained Buy-equivalent ratings on the stock.
Fri, Mar. 4, 8:58 AM
- Monsanto (NYSE:MON) threatens to pull out of India if the government imposes a 70% cut in royalties that local companies pay for its genetically modified cotton seeds, Reuters reports.
- MON's joint venture with India's Mahyco licenses a gene that produces its own pesticide to a number of local seed companies in lieu of royalties and an upfront payment; amid complaints of local seeds companies that MMB was charging high fees, a farm ministry committee reportedly is recommending a ~70% cut in the royalty, or trait fee, that the seed companies pay to MMB.
- "If the committee recommends imposing a sharp, mandatory cut in the trait fees paid on Bt-cotton seeds, MMB will have no choice but to re-evaluate every aspect of our position in India," MON's top exec for the India region says.
- MON -1.1% premarket.
Thu, Mar. 3, 10:10 AM
- The European Union is expected to extend approval next week for weed-killer ingredient glyphosate, used in many herbicides including Monsanto's (MON -0.3%) Roundup, Reuters reports.
- An expected closed-door meeting next Monday and Tuesday in Brussels appears set to produce an endorsement of a European Commission proposal to extend authorization of glyphosate for 15 years until 2031, according to the report.
- The opinion of the European Food Safety Authority, which advises EU policymakers, is that glyphosate is not likely to cause cancer, a conclusion at odds with the view of the World Health Organization's International Agency for Research on Cancer.
Wed, Mar. 2, 12:49 PM
- Monsanto (MON -7.5%) sinks after cutting its FY 2016 and Q2 profit outlook, citing weak foreign currencies, increased generic competition and compressed grower margins.
- CEO Hugh Grant says MON may not achieve its target of doubling EPS by 2019 because of the current struggles, and that MON is no longer interested in buying Syngenta (SYT -0.9%) after the latter agreed to be acquired by ChemChina.
- Before MON's announcement, the Bernstein research firm called a bottom in the agricultural cycle, which it sees as positive for MON and Potash (POT +3.4%), as spot potash prices are expected to trend positively during the spring planting season.
- Related tickers: DD -1.2%, DOW -0.8%, AGU -1.2%, CF -3.5%.
Wed, Mar. 2, 9:15 AM
Wed, Mar. 2, 8:23 AM
- Monsanto (NYSE:MON) -4.9% premarket after guiding its FY 2016 and Q2 earnings below consensus amid a deteriorating macro environment.
- MON now sees Q2 EPS of $2.35-$2.45 vs. $2.85 consensus cuts FY 2016 EPS guidance to $4.40-$5.10 from its earlier view of $5.10-$5.60 and below $5.16 analyst consensus, citing weak foreign currencies, generic glyphosate pricing, and compressed grower margins coming from lower commodity prices.
- MON also cuts its full-year free cash flow guidance range to $1.4B-$1.6B from $1.6B-$1.8B.
- MON now expects FY 2016 gross profit growth from its core seeds and genomics segment to come in relatively flat Y/Y, and expects its ag productivity segment gross profit closer to the mid-point of the $900M-$1.1B range.
Mon, Feb. 29, 5:58 PM
- A single paragraph added to a sweeping chemical safety bill could greatly benefit Monsanto (NYSE:MON) by shielding the company from costly liability for making now-banned toxic PCB chemicals, according to a NY Times report.
- The PCB provision is one of several area that Senate and House negotiators must work through before passing a law to revamp the way thousands of chemicals are regulated in the U.S., but some of the most vociferous objections relate to the so-called "Monsanto Clause" - which does not mention the company by name, but between the early 1930s and 1977, MON manufactured nearly all of the 1.25B lbs. of PCBs sold in the U.S.
- MON says it never asked for the change, but by November, the company clearly was aware of the provision, according to the report; arguing before a federal court in Texas, a lawyer representing MON cited the House language to say that some of the legal claims against the company’s past PCB business should be dismissed.
Wed, Feb. 10, 2:57 PM
- Monsanto (MON -3.7%) CEO Hugh Grant has voluntarily returned more than $3M in bonuses and stock awards after an SEC investigation found the company had misstated earnings from its Roundup herbicide.
- Former CFO Carl Casale also returned ~$700K he received during the years in which earnings were misrepresented.
- The SEC found that MON failed to account for the operating costs of a rebate program that ran during 2009-11 to help boost sales that were being hurt by competition from cheaper, generic herbicides.
Tue, Feb. 9, 2:46 PM
- Monsanto (MON +0.4%) agrees to pay an $80M penalty as part of a settlement of charges from the SEC that it violated accounting rules and misstated earnings related to its Roundup herbicide.
- The SEC says MON did not properly account for tens of millions of dollars in rebates the company paid to retailers and distributors, the costs of which were not fully reflected when MON booked Roundup sales, leading three years of "materially” misstated earnings; the SEC did not specify the amount of the misstated earnings.
- MON also agrees to retain an independent compliance consultant, and three accounting and sales execs at the company will pay a total of $135K in penalties to settle individual charges.
Wed, Feb. 3, 2:45 PM
- Monsanto (MON +1.6%) says it received import approval from China for its new genetically modified Roundup Ready 2 Xtend soybeans, and that it will begin selling the seeds in the U.S. and Canada.
- MON's next-generation soybean variety is engineered to tolerate applications of glyphosate and dicamba herbicides amid a growing problem of glyphosate-resistant weeds in North America.
- Dicamba use is allowed in Canada but not yet approved in the U.S., where it is still under review by the EPA.
Wed, Feb. 3, 2:07 AM
- ChemChina is offering to buy Switzerland's Syngenta (NYSE:SYT) in a deal worth more than $43B - a move that would translate into the largest ever international takeover by a Chinese company.
- Syngenta's board has recommended the 480 francs per share deal (a 20% premium based on Tuesday's closing price) to shareholders.
- If completed, the transaction would help ChemChina transform into the world's biggest supplier of pesticides and agrochemicals, while snatching an asset that was once the target of St. Louis-based Monsanto (NYSE:MON).
- SYT +3.7% premarket
- Previously: WSJ: ChemChina nears deal to buy controlling stake in Syngenta (Feb. 02 2016)
Fri, Jan. 29, 4:35 PM
- Monsanto (NYSE:MON) declares $0.54/share quarterly dividend, in line with previous.
- Forward yield 2.38%
- Payable April 29; for shareholders of record April 8; ex-div April 6.
Tue, Jan. 26, 8:05 AM
- CTFN Contributor Valeria Camerino reports that market observers believe ChemChina's CHF470 (US$462) per share bid ($44B) for 70% of Syngenta (NYSE:SYT) is more likely to pass antitrust scrutiny than a potential merger with Monsanto (NYSE:MON) because there is less overlap. A deal could be reached as soon as next month.
- In December, Syngenta's board turned down Monsanto's $47B offer stating that it significantly undervalued the firm.
- ChemChina is a major player in generic pesticides, but has no appreciable footprint in high-tech herbicides, insecticides, fungicides or seeds. Also Chinese ownership would enhance penetration in key emerging markets. A bump in the road, however, could be the purchase of Syngenta's U.S.-based assets by a Chinese acquirer.
- Syngenta is an attractive target on the basis of its seeds business and first rate crop protection chemicals portfolio. It is the only pure play in Europe in these areas.
- As far as Monsanto is concerned, one observer believes it makes more strategic sense for Syngenta to acquire Monsanto and dispose of the crop protection chemicals business and any required seeds assets, along with the related salesforce and technical support. He feels that Monsanto would be better served by merging with BASF's (OTCQX:BASFY) crop chemical business.
- Previously: Bloomberg: ChemChina moves closer to potential Syngenta deal (Jan. 15)
- Previously: Syngenta talking with Monsanto, ChemChina and others, chairman says (Dec. 22, 2015)
Thu, Jan. 21, 7:12 PM
- Monsanto (NYSE:MON) files a lawsuit in California seeking to prevent glyphosate, the main ingredient in its Roundup herbicide, from being added to the state's list of known carcinogens.
- MON says it filed the suit against the state's Office of Environmental Health Hazard Assessment, which said in September that it planned to add glyphosate to the list after the World Health Organization classified it as a probable human carcinogen.
- MON's lawsuit argues that listing glyphosate as a carcinogen based on the WHO's classification cedes regulatory authority to an "unelected, undemocratic, unaccountable, and foreign body" that is not subject to oversight by any state or federal entity.
Wed, Jan. 13, 5:56 PM
- Monsanto (NYSE:MON) says it expects to begin construction in March of a $140M cottonseed processing plant in Lubbock, Tex., to serve as its U.S. hub for the company’s commercial cottonseed processing operations.
- MON's head of cotton manufacturing says the new facility will boost collaboration and efficiency, while its location in Lubbock will "allow for better alignment with the cotton industry.”
- MON expects to complete the plant in H2 2017.
Wed, Jan. 6, 2:19 PM
- Monsanto (MON -1.8%) CEO Hugh Grant says a deepening decline in the agricultural industry has strengthened the rationale for combining the company, the world’s largest seller of seeds, with Syngenta (SYT -2.2%), the top seller of pesticides, but engagement about a possible merger has been “difficult."
- In today's earnings conference call, Grant did not elaborate on the difficulty in engaging SYT, but said MON still sees a "significant opportunity" through integrating SYT's pesticide portfolio and that MON's pipeline of crop genes, high-performing seeds and new computer-powered farming services make the company a prime partner for merger deals.
- SYT CFO and interim CEO John Ramsay had said in an interview last month that the company was discussing possible deals with “a number of parties” and signaled new openness to discussing a deal with MON.
- Earlier: Monsanto to cut more jobs as Q4 sales slide, 2016 EPS outlook trimmed
Monsanto Co. engages in the distribution of agricultural products to farmers. The company operates its business through the following business segments: Seeds & Genomics and Agricultural Productivity. The Seeds & Genomics segment produces seed brands, including DEKALB, Asgrow, Deltapine,... More
Sector: Basic Materials
Industry: Agricultural Chemicals
Country: United States