U.S. agrochemicals firm Monsanto Co and its advisers are working flat out to accommodate Syngenta's qualms about regulatory hurdles to a deal whose perils may well outweigh the rewards.
Investment bankers and analysts expect Monsanto to increase its bid by about 10 percent, to just short of 500 SFr, while others say Monsanto cannot afford to be scorned by the target again and would be ready to offer potentially close to 550 SFr.
But chances that antitrust regulators will block the deal remain high since the combined entity would control more of 40 percent of the U.S. seeds market.
"The deal may not happen," said a source close to Syngenta, speaking on condition of anonymity.
He mentioned growing skepticism among Syngenta's board that antitrust hurdles could be overcome.
Driven by regulatory concerns, Monsanto said on May 20 it would make the deal "really clean" and "really easy to get done," in the words of the U.S. group's Chief Operating Officer Brett Begemann, by selling Syngenta's entire seeds business and certain crop chemical assets.
Yet the deal is anything but easy.
Sources said Monsanto has recently made changes to its team of external legal advisers in an effort to win Syngenta's support, which it needs to follow the deal through.
Antitrust advisers of both companies have met twice in New York, the most recent a week ago, a person familiar with the matter said, but it remains unclear whether there has been any agreement.
Selling Syngenta's seeds business, which accounts for about 30 percent of the group's sales and which commands an 8 percent global market share, means unraveling Syngenta's "integrated" strategy of managing the seeds and pesticides product lines as one, in place since 2011.
Syngenta's board, led by Michel Demare, wants a "safe deal" and is unwilling to share the risk of the deal falling apart after months of regulatory scrutiny.
The Swiss firm, the world's largest agrochemical maker by market share, expects regulators to consider the combined group's dominance of the broader agricultural inputs market and not look just at seeds and chemicals markets separately, said people with knowledge of the industry.
Even excluding Syngenta's seeds business, the combined group would still command roughly 30 percent of the global seeds and pesticides market. That figure would be much higher in North and South American markets, where Monsanto generates about 80 percent of the group's revenues.
Managers In A Bind
Beside undertaking a radical change of strategy, Syngenta would also face reputational risks as Monsanto's key products are challenged by regulatory scrutiny and a consumer backlash in Monsanto's top market, the United States.
Syngenta will find it hard to weigh up any substantial breakup fee, which sources say will be a key element of any bid, against management attention diverted by a futile merger project.
But if Syngenta continues to reject Monsanto's or any rival bidders' advances, the onus will be on management to create the same value going it alone.
Analysts on average expect earnings per share at the Swiss group, created from the agribusinesses of Novartis and AstraZeneca in 2000, to grow an average 6-7 percent per annum over the next three years, according to Thomson Reuters data.
Monsanto first tested Syngenta's appetite for a deal in 2014.
Last month it offered to buy the business for $45 billion with a 45-percent cash offer. But the bid, which valued Syngenta at 449 SFr, was rebuffed.
The St. Louis-based group is now pressured by industry rivals who may step in to derail its takeover plans.
On Thursday Reuters exclusively reported that BASF is discussing a potential counter-bid with investment banks.
A combination of BASF and Syngenta would also face major anti-trust issues, especially in fungicides and in Europe, analysts say.