US agrees to ChemChina’s US$43 bln Syngenta takeover
BEIJING: US authorities have agreed to the US$ 43 billion takeover of Swiss pesticide giant Syngenta by state- owned ChemChina, marking the biggest overseas acquisition by a Chinese firm.
The move lays the path for what would be the latest in a string of foreign investments by Chinese firms fuelled by Beijing’s call for its companies to ‘go out’ and expand.
It also comes days before a meeting between China’s President Xi Jinping and Donald Trump, who has castigated China over its huge trade surplus with the US and warned its companies are putting American jobs in danger.
On Tuesday the Federal Trade Commission said it would give the go-ahead to the buyout by China National Chemical Corp, the nation’s biggest chemical company, as long as it stopped producing three pesticides to avoid monopoly conflicts.
The offer far outstrips China’s biggest overseas acquisition to date, CNOOC’s purchase of Canadian oil firm Nexen for US$ 15.1 billion in 2013 and the US$ 14.3 billion paid for a minority stake in Australia’s Rio Tinto by stateowned aluminium firm Chinalco in 2008.
It also follows a series of purchases by ChemChina.
Last year it bought a stake in Swiss energy and commodities trader Mercuria as well as Germany’s KraussMaffei Group, which makes machinery for producing plastics and rubber.
And in 2015 it took over Italian tyre giant Pirelli, renowned for its Formula One equipment and racy calendars.
However, Beijing late last year began cracking down on companies’ overseas investments after a record- setting shopping spree raised concerns capital flight and reckless spending are dragging on the economy and leading to a drop in the yuan currency.
The restrictions ban most deals above US$ 10 billion and curb investments of more than US$ 1 billion in sectors unrelated to a company’s core business.
Under a preliminary settlement, the FTC said ChemChina would have to offload the herbicide paraquat, insecticide abamectin and fungicide chlorothalonil, saying consumer prices would be in danger of rising otherwise.
“Without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta’s branded products,” the FTC said.
“The merger would also increase the likelihood that US customers buying paraquat, abamectin and chlorothalonil would be forced to pay higher prices or accept reduced service for these products.” More than a quarter of Syngenta’s revenue in 2015 came from seeds and crop protection in North America, according to Bloomberg, while it also has research and production units there.
The FTC said it worked with its counterparts in Australia, Canada, the European Union, India and Mexico “to analyse the proposed transaction and potential remedies.” Last month the Swiss firm’s chief executive officer, Erik Fyrwald, sought to reassure about its future.
“Syngenta will stay Syngenta” and will keep its headquarters in Basel, Switzerland, he told Bloomberg in an interview last month. — AFP
Without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta’s branded products. FTC