Monsanto-Syngenta Could Be a Tax Inversion Under Current Rules
(Bloomberg) — Monsanto Co.’s potential acquisition of rival agricultural-chemical maker Syngenta AG could be structured as a tax inversion under current U.S. rules despite political resistance to such deals, according to an analysis by Bloomberg Intelligence.
Switzerland’s Syngenta last week rejected St. Louis-based Monsanto’s $45 billion takeover offer. Monsanto, the world’s largest seed company, said it’s confident it can obtain regulatory approval for a takeover.
Should such a deal eventually happen, relocating Monsanto to Switzerland would enable it to pay less corporate tax. Syngenta’s tax-rate guidance this year is about 15 percent, compared with 28 percent to 30 percent for Monsanto, said Jason Miner and Tiffany Young, analysts at Bloomberg Intelligence.
Tax inversions are under political pressure after a rash of deals over the past couple of years sought to reincorporate U.S. companies in lower-tax countries. Yet bills in both houses of the U.S. Congress to raise the foreign-ownership threshold to 50 percent from 20 percent on such transactions probably won’t pass this year, Miner and Young said in a research note Monday. A Monsanto-Syngenta deal would pass the 20 percent threshold.
Syngenta said Friday that Monsanto’s offer undervalued the Swiss company and that a merger would have significant execution risks. A Monsanto spokesman didn’t immediately respond to a message left Monday seeking comment on whether it’s looking to execute a tax inversion.