U.S. Sen. Dick Durbin, D-Ill., is pointing to recently released filings from Swiss agricultural giant Syngenta as proof that Monsanto is looking to move its “tax address” out of the United States in a move known as a “corporate inversion” in which U.S. companies move their headquarters out of the U.S. — on paper at least — to avoid paying U.S. taxes.
“It’s clear that Monsanto, a company that has prospered and expanded in large part due to U.S. taxpayer-funded programs and services, intends to reincorporate overseas as part of its proposed acquisition of Sygenta in order to avoid paying U.S. taxes,” Durbin said in a statement released by his office.
Durbin’s comments came as Syngenta rejected a second takeover offer from Monsanto Monday. In a letter released Monday, Syngenta's leadership said they rejected the latest offer for the same reason the company rejected the first offer in May — specifically that Monsanto’s offer undervalues the Swiss agricultural chemical company. It also termed a $2 billion breakup fee offered by Monsanto on the chance that regulators rejected the takeover was “wholly inadequate.”
In an email to St. Louis Public Radio, Monsanto said the offer to acquire Syngenta is not a tax-driven deal: “If people view our Syngenta proposal as tax-driven, it misses the vision of what we intend to unlock. This is about creating a new company focused on increased innovation and expanded global reach to support farmers around the world.”
The inclusion of a “neutral site” as a corporate base for the combined company was made at the request of Syngenta, in previous negotiations, according to Monsanto spokeswoman Sara Miller, and was not included in the company’s second takeover offer.
Asked whether that meant Monsanto was “backing away from that position” and would keep its tax address in the United States if it could, Miller responded in an email that she could not speculate on that.
“This will be the subject of future negotiations once Syngenta’s management and board start engaging on the opportunity that this transaction will create for our respective shareholders, employees and customers around the world.”
Miller said, Monsanto remains “committed to the U.S. and our hometown of St. Louis,” noting the company is currently well into a $400 million expansion, which she says will create nearly 700 new jobs and is expected to be completed in 2017.
Monsanto's vice president of strategy Scott Partridge was on the Diane Rehm Show Tuesday. He said Monsanto is willing to consider a neutral location to be the headquarters of Europe, Mid-East and Africa.
"But this company is based in St. Louis and operationally this company is committed to being based St. Louis," Partridge said. "We’re committed to growing jobs in St. Louis. Whether there is a new domicile for the company that is a matter to be discussed, but that’s not what’s driving this deal."
In May, Durbin sent a letter to Monsanto's CEO Hugh Grant asking the company to keep its corporate tax headquarters in the United States. In the letter, Durbin saidthe company had benefited from taxpayer funded programs and services, allowing it to become the multi-billion dollar global company that it is today from its origins more than 100 years ago.
Durbin’s legislation making it harder for U.S. companies to “invert” is not expected to move out of committee in this Republican-led Congress. U.S. Rep. Ann Wagner, R-Ballwin, whose district includes Monsanto’s current headquarters, told Bloomberg news: “The only legislation that at some point needs to be brought forward is tax reform, to be perfectly honest.” Senate Majority Leader Mitch McConnell, R-Ky., has said that comprehensive tax reform — at least something that could pass both Republican led chambers — is unlikely while President Barack Obama is in office.
