ChemChina close to buying Swiss agrochemical giant Syngenta for $42.2 bn

State-owned China National Chemical Corporation (ChemChina) is close to buying Swiss agrochemical giant Syngenta AG for around 43 billion Swiss francs ($42.2 billion), Bloomberg yesterday reported, citing people familiar with the matter.

The potential deal comes eight months after Syngenta spurned a $45 billion unsolicited takeover offer from US rival Monsanto Co, saying that the offer undervalued the company and had execution risks. (See: Syngenta rejects $45 billion Monsanto takeover offer)

The deal, for roughly 470 Swiss francs per share in cash, is likely to be announced today, the report said.

ChemChina's offer would be at a premium of about 24 per cent to Syngenta's Monday close of 378.40 francs, the report added.

A completed deal would be the largest acquisition by a Chinese firm, surpassing the 2008 purchase of China Netcom Group by China Unicom Hong Kong Ltd for $29 billion, and also the biggest overseas acquisition by a Chinese company after the $18.2 billion purchase of Canadian oil company Nexen by Cnooc Ltd in 2013.

Bloomberg also said that ChemChina has lined up bridge financing of about $25 billion for the all-cash deal from banks.

Syngenta, which has a market cap of $36.3 billion and annual revenues of $15.3 billion, was formed through the 2000 merger of Novartis Agribusiness and Zeneca Agrochemicals and has since grown through 13 acquisitions.

The Basel-based company is the world's largest crop chemical producer, and the third-largest in seeds and biotechnology by sales.

The company deals in herbicides, insecticides and fungicides for crop protection, field crops, vegetables and flower seeds, seed-care products and turf, garden, home care and public health products.

Listed on the Swiss and New York stock exchanges, Syngenta employs over 28,000 people in over 90 countries and has 12 production facilities across Switzerland, the US, the UK, Brazil, India, France and China.

Its main competitors are Monsanto Company, BASF, Dow AgroSciences, Bayer CropScience and DuPont Pioneer.

For ChemChina, the Syngenta transaction would be the biggest overseas acquisition after it purchased Italian tyremaker Pirelli in August in a $7.7 billion deal.

Beijing-based, ChemChina was created in 2005 by putting together several chemical firms under the erstwhile ministry of chemical industry and grew into a $36.5 billion business with 140,000 employees under chief executive Aye Ren Jianxin, a former communist youth league leader.

However, it is still overshadowed by state-owned behemoths Sinopec Corp and PetroChina Co Ltd.

But a deal would need to pass antitrust regulators in Europe, the US, the UK, India, Brazil and China, where Syngenta operates.

The deal would also have to be approved by the US Committee on Foreign Investment (CFIUS), which last month blocked the $3.3 billion sale of Royal Philips NV's lightning business to Chinese private equity firm Go Scale Capital. (See: Philips terminates $3.3-bn Lumileds sale to Chinese PE firm on US regulatory concern)

But CFIUS approved the 2013 acquisition of Smithfield Foods Inc, the world's largest hog and pork producer by China's Shuanghui International Holdings for $7.1 billion.