US agrees to ChemChina’s $43 bn takeover of Syngenta
BEIJING: US authorities have agreed to the $43 billion takeover of Swiss pesticide giant Syngenta by stateowned 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.
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 $15.1 billion in 2013 and the $14.3 billion paid for a minority stake in Australia’s Rio Tinto by state-owned 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 recordsetting 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 $10 billion and curb investments of more than $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.