Any DuPont, Dow Chemical marriage could reignite European deals


A potential $130 billion merger of Dow Chemical Co (DOW.N) and DuPont (DD.N) could prompt a renewed flurry of takeover bids for European rivals with Switzerland’s Syngenta AG (SYNN.VX) the most likely target.

Syngenta, the world’s largest agrochemicals company, fended off a $47 billion offer from U.S. group Monsanto (MON.N) in August and reportedly rejected a $42 billion pursuit by state-owned China National Chemical Corp or ChemChina last month.

But any merger between Dow Chemical and DuPont, which would create one of the world’s largest chemical companies with more than $92 billion in annual sales, could embolden Syngenta’s spurned suitors to have another go, Bernstein analysts said.

Syngenta’s U.S.-listed shares rose more than 7 percent and closed up 1.69 percent at 366.10 Swiss Francs on Wednesday in Switzerland.

“We think this makes it more likely that Monsanto re-approaches Syngenta with a bid of up to 485 (Swiss Francs per share),” the analysts said. Monsanto had offered 470 Swiss Francs in a cash and stock.

A merger of Dow and DuPont would put further pressure on rivals such as Germany’s BASF SE (BASFn.DE) and Bayer AG (BAYGn.DE) to consolidate as falling crop prices curb sales.

Talks between Dow and DuPont are at a late stage and it appeared unlikely a competitor would swoop in with a counter bid. Wall Street welcomed the reported merger talks, lifting shares of both companies by 12 percent.

“If you intervene it has to be cash, and who is prepared it to put down $40-50 billion in cash today?” asked one banker who advises on takeovers and spoke on condition of anonymity.

Funding would not be an issue for ChemChina if it made an offer for Syngenta. ChemChina has a 5 percent share of global crop chemicals through its ownership of Israeli generic pesticides maker Adama. The Chinese firm would like to expand internationally but is unlikely to pursue a hostile bid and would prefer a smaller, more manageable transaction, bankers in Asia said.

Dow and DuPont plan to break their combined firm into three different businesses – agricultural, specialty chemicals and plastics – following a deal, helping them to navigate regulatory concerns about their reach in multiple markets.

Those businesses were unlikely to attract any serious suitors in the first several quarters of stand alone operation because any bidder would have to pay shareholders a higher premium to compensate them for additional taxes related to a takeover.

Regulators could still require both companies to sell off some businesses to curb their influence in particular markets, meaning that Syngenta, Monsanto and other players could wait in the wings for pieces of the Dow DuPont agribusiness to be sold.

(Additional reporting by Greg Roumeliotis in New York, Karl Plume in Chicago, Denny Thomas in Hong Kong and Freya Berry in London; editing by Grant McCool)


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