EU plans to approve ChemChina bid
$43b acquisition of Syngenta will supplement Chinese firm’s business
State-owned China National Chemical Corp (ChemChina) is scheduled to secure conditional EU antitrust approval for its bid for Switzerland-based seeds and pesticides company Syngenta, media reports said Friday, citing sources.
Experts noted that the deal would help supplement ChemChina’s business while also help Syngenta seek growth in the global market.
In February 2016, ChemChina announced that it had agreed to take over Syngenta in a deal worth $43 billion, according to a statement posted on the website of ChemChina.
ChemChina could not be reached for comment as of press time.
In an earlier interview, a spokesper- son for ChemChina who declined to be identified told the Global Times that the takeover would have a positive effect on global food supplies and safety.
The deal would mark the largest-ever foreign acquisition by a Chinese enterprise, and the European Commission could possibly announce its approval in March, ahead of its April 12 deadline, according to Reuters.
The acquisition has however encountered hurdles in different countries and regions that must give their approval.
The European Commission launched a probe in October 2016 to assess whether the deal is in line with relevant regulations, saying they had concerns about potentially unfair competitive advantages.
Commissioner Margrethe Vestager voiced concerns in a statement on the organization’s website, noting that “the proposed merger would lead to higher prices or a reduced choice for farmers.”
However, Li Junjie, a professor from the Renmin University of China, told the Global Times on Friday that “in fact, some concerns related to competition are overstated.”
Li elaborated that the two companies are rumored to have overlapping business activities, which will harm the growth of both parties; but that should be evaluated in terms of how much their businesses overlap.
“The impact would be very slight if there are limited overlapping sectors,” he said.
Furthermore, in response to concerns the takeover sparked among US politicians, the spokesperson of China’s Ministry of Commerce Shen Danyang told a press conference in April 2016 that the bid “couldn’t be any more normal.”
ChemChina has agreed to minor concessions to ease the European Commission’s concerns over its acquisition of Syngenta, said media reports.
The Chinese firm will divest a couple of national product registrations, including existing products and a few in the pipeline, in more than a dozen EU countries, the Reuters report said.
Yet we should remember the deal is still to be finalized, as takeovers always go through many approval procedures, which are independent and different across various countries and regions, warned Li.