GOOD CHEMISTRY
Acquisition would be biggest by Chinese
China National Chemical Corporation wants to buy a Swiss pesticide maker in the largestever acquisition by a Chinese company.
LONDON: China National Chemical Corp is in talks to buy Swiss pesticide maker Syngenta AG in what would be the largest acquisition ever by a Chinese company, according to sources.
ChemChina, as the state-owned company is known, offered about 449 Swiss francs a share in cash, which values Syngenta at 41.7 billion francs (US$42 billion), said a source.
Syngenta said the figure was too low, citing the regulatory risks to a deal, but it served as a basis for discussions. The Basel-based company spurned a cash-and-stock offer at the same price this year from Monsanto Co as well as a subsequent 470-franc-a-share bid from the US suitor.
While a deal isn’t imminent, the two sides are still talking and an agreement could be reached in the next few weeks, said sources.
Syngenta, the world’s largest pesticide producer, is also talking to other potential suitors as it explores options. Talks may fall apart and Syngenta may decide to stay independent or seek acquisitions of its own, sources said.
As China’s economy has surged in recent years, its companies increasingly have been looking overseas for acquisitions. In the most recent Chinese purchase of a Swiss company, HNA Group, the owner of China’s fourth-largest airline, in July agreed to buy airport cargo handler Swissport International for 2.73 billion francs.
In March, ChemChina agreed to buy a 26.2% stake in Pirelli & C. SpA from the Italian tyremaker’s largest shareholder in a deal that valued the target at about $7.7 billion. ChemChina and other buyers then made a public tender offer for the rest of the company, a deal that closed this month.
The Swiss government has typically abstained from commenting on takeovers, but it has sought to cultivate economic ties with China. Last year, Switzerland became the second European country after Iceland to sign a free trade agreement with China, stealing a march on European and US rivals.
A deal with Syngenta would give China a major position in the global agriculture industry, which is increasingly important as the nation imports more food.
Chinese President Xi Jinping is trying to boost agricultural output to maintain self-sufficiency as a growing middle class consumes more grain-intensive meat and farmland is converted to housing and golf courses.
The World Bank estimates that China’s arable land declined 6% in the last decade as economic growth boomed.
In May, Mr Xi gave farmers more rights to help keep them on the land and increase production. The same month, he called for the country to take the lead in development of genetically modified organisms such as the herbicide-tolerant crops developed by Syngenta.
Last month, Syngenta named chief financial officer John Ramsay as provisional chief executive officer to replace Mike Mack, who quit suddenly.
Mr Mack faced shareholder criticism after he refused to engage in talks with Monsanto over its takeover approach. Syngenta rejected the bids for being too low and failing to recognise fully its prospects and the threat of antitrust hurdles.
Syngenta makes agricultural pesticides, including chemicals that kill weeds and bugs.