US panel ap­proves Chi­nese firm on Syn­genta

China Daily (USA) - - FRONT PAGE - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

The ap­proval by a US na­tional security watch­dog for China Na­tional Chem­i­cal Corp’s pro­posed takeover of seed and pes­ti­cide maker Syn­genta AG is a sig­nif­i­cant de­vel­op­ment for Chi­nese in­vest­ment in the US, ac­cord­ing to ob­servers.

This is a good sig­nal for Chi­nese for­eign di­rect in­vest­ment in the US.” Charles Skuba, Ge­orge­town Univer­sity busi­ness pro­fes­sor

The Com­mit­tee on For­eign In­vest­ment in the United States, or CFIUS, cleared the $43 bil­lion ac­qui­si­tion of Syn­genta by China Na­tional Chem­i­cal, known as ChemChina, the com­pa­nies an­nounced Mon­day. The deal still faces an an­titrust re­view from reg­u­la­tors in the Euro­pean Union. ChemChina and Syn­genta said they ex­pect it to close at the end of the year.

“This is a good sig­nal for Chi­nese for­eign di­rect in­vest­ment (FDI) in the US,” said Charles Skuba, pro­fes­sor of in­ter­na­tional busi­ness at Ge­orge­town Univer­sity.

Skuba also said this could help boost the chances for a bi­lat­eral in­vest­ment treaty (BIT) be­tween China and the US. “It would be in China’s in­ter­est to re­duce the sec­tors in its econ­omy that re­main re­stricted to for­eign in­vest­ment like fi­nan­cial ser­vices, agri­cul­ture and cloud com­put­ing to show that US in­vest­ment is also wel­come.”

Even though Syn­genta is based in Switzer­land, a CFIUS re­view was war­ranted be­cause the com­pany is the big­gest seller of pes­ti­cides in North Amer­ica from where it gets nearly a quar­ter of its rev­enue. It has fa­cil­i­ties in North Carolina.

In March, a group of farm­state US sen­a­tors called on the Trea­sury De­part­ment to re­view the trans­ac­tion on con­cerns that Chi­nese con­trol could af­fect US food security and farm in­ter­ests as ChemChina is State-owned.

The CFIUS ap­proval “demon­strates that, although the CFIUS process may take some time and de­lib­er­ate con­sid­er­a­tion, if a cor­po­ra­tion has a prop­erly devel­oped plan and the right pre­sen­ta­tion to the gov­ern­ment, it can suc­ceed. The US gov­ern­ment un­der­stands the im­por­tance of for­eign in­vest­ment and through the CFIUS process, is able to bal­ance that priority with na­tional security con­cerns,” Chris Griner, the chair of Stroock, Stroock & La­van LLP’s CFIUS prac­tice, said in a state­ment.

“The CFIUS ap­proval re­moves a ma­jor po­ten­tial hur­dle and should come as a re­lief to Syn­genta share­hold­ers,” said Chris­tian Faitz, co-head of chem­i­cals re­search at bro­ker­age Ke­pler Cheuvreux, in a Wall Street Jour­nal ar­ti­cle.

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