MONSANTO 
ZURICH (Reuters) - Syngenta (>> Syngenta AG) and unwanted U.S. suitor Monsanto (>> Monsanto Company) squabbled over an earnings report from the Swiss pesticides maker on Thursday, with both sides claiming it strengthened their case in a $45 billion takeover battle.
Monsanto wants to combine its world-leading seeds business with Syngenta's own seeds and pesticides. Syngenta has rejected the proposal and refused to open its books, despite the offer of a $2 billion cash payment should the transaction fail to win regulatory approval.
Adjusted earnings per share from Syngenta fell 6 percent and sales fell 10 percent in the first six months of the year but still exceeded average estimates in a Reuters poll. Adjusted for currency swings, sales rose 3 percent.
Syngenta also said it was sticking with profitability targets viewed as ambitious by some analysts, and highlighted the potential of new products in development, such as fungicides for vegetable and cereals farmers, which it believes give it a strong future alone, despite Monsanto’s repeated approaches.
"We said no in 2011, we said no in 2012, we said no in 2015. What part of no don't they understand?" Chief Executive Michael Mack told a press conference at the group's Basel headquarters.
Baader Bank analyst Markus Mayer said the first-half figures "might be the base for Monsanto to come up with a new offer which has at first only a higher cash proportion to raise pressure and to bring Syngenta management back into negotiations and then come up with a higher offer price".
For now, though, Monsanto is standing firm.
"Syngenta's earnings announcement confirms it still does not have a long-term vision or plan that would create the same value as Monsanto's very attractive 449 Swiss franc (per share)proposal," Monsanto Chairman Hugh Grant said in a statement.
"Monsanto remains ready to discuss with Syngenta a combination that would provide highly attractive returns to shareholders ... The ball remains in their court."
Syngenta shares were down 2 percent at 395.40 francs at 0815 EDT.
UNDER PRESSURE
Last week, Monsanto said it was a long way off a hostile bid for Syngenta and focused on a negotiated deal.
Syngenta is under pressure from some shareholders. Hedge fund Paulson & Co has taken a stake in the Swiss company and could push for it to accept an offer form Monsanto, people familiar with the matter have said, while Henderson, one of Syngenta's top-20 investors has criticized it for limiting communication with all but the biggest investors to a YouTube video.
Mack said on Thursday Syngenta's stance was backed by a broad base of important investors.
The company also said it was sticking with its target for a 24-26 percent margin on earnings before interest, taxes, depreciation and amortization (EBITDA) over sales for 2018. That is seen by many analyst as a challenge, coming from a 19.3 percent margin in 2014 and a projected 20 percent for this year.
Syngenta is trying to catch up with key rivals, mainly through cost cuts in its underperforming seeds business. Its closest peer in pesticides, Bayer's (>> Bayer AG) CropScience unit, had an EBITDA margin of 24.8 percent last year while Monsanto had 29 percent.
The Swiss group, the result of Novartis and AstraZeneca pairing up their agribusinesses in 2000, also drew attention to its development effort, predicting $3.6 billion in peak sales from products to be launched by 2022.
It even pointed to $3 billion in annual sales potential as far in the future as 2032 from new hybrid wheat seeds it is working on.
"I completely reject any suggestion that the company is incomplete in any way," Mack told Reuters in a phone interview.
MainFirst bank analyst Bernd Pomrehn said the Swiss firm had options. "These results certainly put Syngenta in a strong position for negotiations on a combination with any other player in the industry. We consequently confirm our "Outperform" rating," he said.
(Reporting by Ludwig Burger; Writing by Georgina Prodhan; Editing by Keith Weir and Mark Potter)
By Ludwig Burger
