Monsanto (MON) is trying to pull off the largest agribusiness merger ever.

The company made a $45-billion unsolicited offer for its rival, Syngenta AG (SYT) – a Swiss chemical company.

But on May 8, Syngenta rejected the offer, saying the price undervalued the company.

You can’t blame Monsanto for trying, though. A merged entity would be a powerhouse in agribusiness.

It would be the world’s biggest supplier of seeds, with a 45% share. And the largest provider of crop sprays to farmers, with a 30% share.

But Monsanto’s position as the leader in genetically modified foods (sometimes referred to as Frankenstein foods) means any deal would be highly scrutinized by many countries that have banned genetically modified organism (GMO) foods.

Fond Memories of Chemicals

The proposed deal makes a lot of sense from Monsanto’s perspective.

You see, for two decades, the company turned its back on its century-long history as a chemicals company.

Instead, Monsanto focused on being an agricultural/life-sciences business, with an emphasis on genetically modified crop seeds. Last year, two-thirds of Monsanto’s sales came from selling GMO seeds and licensing plant genetics to other companies.

But now, with growing resistance to GMO crops around the world, the company is again having to reconsider its identity.

In 2014, sales grew at a rate of only 4.7%. That is well down from the 8.7% rate the company had in 2013, and the average rate of 21.3% over the previous five years.

Thus, Monsanto’s management is hoping to go relive the past with its proposal to Syngenta, and jump back into the chemicals business. Last year, Syngenta generated about three-fourths of its $15-billion annual sales from herbicides, fungicides, and other crop-protection chemicals.

Syngenta would also fill another gap for Monsanto, as it has a very strong hold in emerging markets. In fact, over 50% of its sales come from these fast-growing markets.

Comparatively, over 80% of Monsanto’s current sales come from the Americas.

Another benefit for Monsanto is that it would likely be a tax inversion deal. The company could move its base to Switzerland, which has a lower tax rate – 29% in the United States would drop to 15%.

Denied by Syngenta

It’s not really a surprise that Syngenta said, “No.” The deal makes little sense from its perspective.

At the moment, the company is being hurt by a slowdown in developing economies and a strong U.S. dollar. But, the dollar’s rise is slowing, and Syngenta is probably wisely waiting for a turnaround.

Then, there’s the oil factor…

You see, the cost of chemicals production is highly dependent on oil and gas prices. According to Credit Suisse (CS), roughly 70% of the company’s raw material costs are linked to oil. And so far, Syngenta has barely felt the dramatic drop in the oil price, meaning the company has every incentive to wait for the oil effect to kick in and to tell Monsanto, “No.”

In other words, Monsanto’s bid could politely be called “opportunistic.” I’m sure Syngenta’s management has other words to describe it.

The two rivals may eventually merge. But, Monsanto is going to have to pony up a lot more Swiss francs for Syngenta to consider it.

And the chase continues,

Tim Maverick