Lessons from the front
It’s been a tumultuous time in the agribusiness and a busy time for Liana Logiurato, Global Head of M&A at Syngenta International AG, who has just seen through the Syngenta / ChemChina deal. Working at the epicentre of a major industry shakeup, she shares with the MBA class of 2017 how to weather corporate storms, lay the groundwork for successful mergers and acquisitions and what new trends to expect.
Following her 1997 IMD MBA, Liana worked as an investment banker at UBS and Nomura International plc. She then moved to Syngenta in 2010, where, within ten months, she became the Global Head of M&A. She admits that her attraction to the agribusiness came from her personal conviction, not widely shared at the time, that the sector was moving toward a second Big Bang since its formation.
Massive rethinking of the agribusiness
The ongoing Big Bang is transforming the key players and triggering a subsequent smaller consolidation wave, she explained.
Following a first period of consolidation from 1996 to 2002, during which Syngenta was formed via the merger of Novartis Agribusiness and Zeneca Agrochemicals, the major players launched into a ‘string of pearls’ strategy with acquisitions throughout the world, more than 40 for respectively both Syngenta and Monsanto.
In parallel, a portfolio clean-up took place with numerous divestures, and the industry landscape became more complex with the arrival of new entrants, such as Arysta and FMC. “All these factors contributed to further reshaping the AG landscape.”
Then in 2015, as Liana had anticipated, came the new Big Bang with the merger of Dow DuPont, the takeover of Syngenta by China National Chemical Corp, a state-owned enterprise, and the takeover of Monsanto by Bayer.
Closing the deal
“The fact that the ChemChina / Syngenta deal is closed, provides evidence that deals that were considered impossible can me made possible!” So far the $43bn deal is the third largest ever all-cash takeover on a worldwide basis.
The deal closed on 18th May 2017, when Syngenta underwent change of control and will be subsequently delisted. This is a takeover with a change of ownership, not a merger. The transaction has been negotiated in such a way that “Syngenta will remain Syngenta”.
“Since 2000, China and Japan have played a key role in cross-border M&A between Europe and Asia, with announced deal volumes reaching peak in 2016. Although in 2017 the volume of China-led acquisitions looks reduced, there are in the making a number of cross-border deals in a number of industries.”
Liana believes that Europe is better equipped than North America to deal with the diversity and complexity linked to Chinese counterparties, but cautions that no textbook spells out what’s best. “No one is going to give you the best recipe, you’ve got to look at deals on a case-by-case basis.” Furthermore, when deals go live things can move very quickly: she and her team did not have six months to prepare the ground, but less than one. It helped having worked on the corporate defence against Monsanto, but the preparation of the ChemChina deal per se was on the fast track.
When speakers are invited to address IMD’s MBA classes, the experiences they share serve to inspire the future graduates. Amongst Liana’s challenges and observations:
“I am the living proof that career changes can be possible.” Before moving into the agribusiness, Liana’s time as an investment banker was centred around the technology value chain, general industrials, materials and biotech/pharma.
But, beware of disruption and industry acceleration: “Keep a number of options open,” she advises.
“It is important to re-assess and potentially upgrade your skills every five to ten years; you might need to redraw the map for yourself.”
Always keep to two pages and make sure that the business sponsor is on board.
Agents and players
Depending on whether you’re the agent (investment banker) or the player (from industry), on the offence or on the defence, negotiations can be fundamentally different from each other. Liana recommends that M&A teams be composed of members with diverse backgrounds (e.g. investment banking, accounting, industry, legal), but preferably with a solid track record in doing deals.
Be aware of the profound changes in the current roles of CFO’s – in large corporations there is only one CFO, the other finance personnel tend to be finance business partners or controllers. “If you want a fully-fledged CFO role, you may need to work in a small company.”
As the industry fundamentals change, growth slows down and shareholder activism rises, Liana foresees additional adjustments in the landscape.
“The AG industry will continue to go through a challenging time”, she predicts, “On top of this, corporates will have to achieve the synergies in their business cases.”