Feb 4 2016
Syngenta Agrees to $43 Billion ChemChina Takeover Deal would be the largest foreign acquisition by a Chinese company
China’s state-owned ChemChina will acquire the Swiss agri business Syngenta in a long-rumoured and controversial $43 billion (€39.4bn) deal.
Secrecy has surrounded the deal since November 2015, when Syngenta – the producer of bioengineered Enogen corn for the ethanol industry – received a $47 billion takeover offer from the US agricultural juggernaut Monsanto.
Syngenta’s board said the proposed transaction respects the interests of all stakeholders and is unanimously recommending the offer, which will be ChemChina’s largest foreign purchase.
According to the board there is “committed financing for the deal and a strong commitment to pursue regulatory clearances”.
“In making this offer, ChemChina is recognising the quality and potential of Syngenta’s business. This includes industry-leading R&D and manufacturing and the quality of our people worldwide,” said Syngenta’s chairman Michel Demaré.
Syngenta’s existing management will continue to run the company, and after closing a 10 member board of directors will be chaired by Ren Jianxin, chairman of ChemChina, and will include four of the existing Syngenta board members.
“Syngenta will remain Syngenta and will continue to be headquartered in Switzerland,” said Demaré.
The takeover would help ChemChina grow Syngenta’s business in China and other emerging markets, and help to gain a foothold in the U.S. Acquiring Syngenta’s intellectual property is also attractive as the Swiss company develops genetically engineered seeds that may help further open the tightly-regulated Chinese market for biotech crops.
If approved, the deal will make ChemChina the world’s largest producer of pesticides and agrochemicals.
The initial reaction from shareholders was positive.
“We think the offer is fair and would be inclined to tender our shares,” said Mark Evans, a fund manager at London-based THS Partners according to Wall Street Journal.
To seal the deal, the companies now have to cross potentially high regulatory hurdles in the U.S about a quarter of Syngenta’s sales come from North America—and elsewhere.
The global seed and pesticide sector already in has faced consolidation after DuPont and Dow Chemical announced plans to merge in December.
Syngenta said it expected to conclude the deal with ChemChina by the end of 2016.