ChemChina gets Syngenta nod from EU
• State-owned Chinese chemical company moves a step closer to acquiring Swiss pesticide maker for $43bn after winning European antitrust approval
China National Chemical Corporation (ChemChina) won EU antitrust approval for its $43bn takeover of Swiss pesticide maker Syngenta, a day after the US gave its blessing, bringing China’s largest foreign acquisition closer to the finish line.
ChemChina’s offer to divest some pesticides and agricultural products will remove “problematic overlaps” and allow EU regulators to clear the deal, the European Commission said.
The US required the companies to divest three types of pesticides as a condition for completing the deal. The companies expect to close the deal by the end of June. The transaction still needs approval from Chinese antitrust authorities.
The takeover, announced a year ago, is one of a trio of megadeals that would reshape the global agrochemicals industry. Dow Chemical’s $77bn bid to merge with DuPont cleared its biggest hurdle last week when it won EU approval with hefty concessions. Bayer still needs approval for its purchase of Monsanto. The combined transactions would whittle six industry players to three behemoths: one from the US, one German and one Chinese.
VALUE OF STOCK
Syngenta rose 1.4% to Sf453.80 ($451.68) in Zurich. ChemChina’s offer values the stock at about Sf471.27.
Syngenta traded almost Sf94 below the offer price in November 2016 on concern that regulators would block the deal. That gap is now at about Sf17.47 as investors grow confident it will survive scrutiny.
If the deal is completed, ChemChina chairman Ren Jianxin would become head of a chemicals giant that sells products as varied as rubber tyres, pesticides and genetically modified crop seeds.
Behind state-owned ChemChina’s pursuit of Syngenta are China’s ambitions for food security as a growing middle-class consumes more grain-intensive meat and as farmland is converted to housing and golf courses. Syngenta would provide China with global access to farmers from Brazil to the UK.
HEADQUARTERS
“Syngenta will stay Syngenta” and will keep its headquarters in Basel, CEO Erik Fyrwald said in March. He expected to keep his job, he said, and that he had been told that ChemChina management would not be coming over to Syngenta.
“We’re not integrating with ChemChina,” Fyrwald said.
“There will be ChemChina members coming onto our board. The chairman will be chairman Ren from ChemChina. But we fully expect to operate as we do today.”
ChemChina’s offer for Syngenta was China’s biggest overseas deal announced in 2016, when Chinese firms disclosed an unprecedented $248bn of acquisitions outside its borders, according to Bloomberg data. But late in 2016, Chinese authorities began scrutinising crossborder transactions to stop the yuan from weakening further.
The deal comes amid a wave of Chinese investment overseas, setting off concerns in the US that Chinese foreign direct investment in the US reached a record $45.6bn in 2016, according to data provided by research firm Rhodium Group.
President Donald Trump has ordered a study to identify “trade abuse” that contributes to US trade deficits with foreign countries ahead of a meeting with President Xi Jinping of China this week. He has previously accused China of carrying out unfair trade practices that hurt US workers and has called for tariffs on Chinese goods.
SECURITY PANEL
The ChemChina-Syngenta deal was cleared by a US security panel in August 2016, removing what had been seen as the biggest hurdle.
The Federal Trade Commission has jurisdiction over the takeover because Syngenta sells its products in the US.
The company got more than a quarter of its revenue in 2015 from seeds and crop protection in North America. The company also has several research and production facilities in the US.