ChemChina to offer EC more concessions for approving Syngenta acquisition

25 Oct 2016


Chinese state-owned chemicals company ChemChina is willing to offer more concessions to the European regulator in order to obtain approval for its $43-billion proposed acquisition of Swiss pesticide and seed group Syngenta AG, Reuters today reported, citing a source with direct knowledge of the matter.

The move comes a month after the US committee overseeing deals that could threaten national security, approved ChemChina-Syngenta deal. (See: US approves $43-bn ChemChina-Syngenta deal)

The deal has yet to be approved by anti-trust regulators in Europe, the US, the UK, India, Australia and Brazil, where Syngenta operates.

In September, ChemChina had submitted a proposal to the European Commission (EC) with proposed remedies to resolve potential antitrust concerns by offering to sell around $20 million worth of assets from its agrichemical subsidiary Adama Agricultural Solutions, the report said.

But those divestment plans were seen inadequate by the EC, which raised "a more detailed menu of possible remedies" the report added.

Syngenta today said that that the EC and regulators elsewhere have requested for additional information and it now expects the regulatory process to extend into the first quarter of 2017.

The ChemChina-Syngenta deal is among the three agrichemicals industry transactions under the EC scrutiny.

The EC has already launched an in-depth investigation into the Dow Chemical-DuPont merger and Bayer-Monsanto tie-up.

In April, ChemChina struck a friendly $43-billion deal with Swiss seeds and pesticides giant Syngenta in a bid to become the world's biggest supplier of pesticides and agrochemicals (See: ChemChina to acquire Syngenta in $43-bn friendly deal).

If successful, the deal will be the biggest overseas acquisition by a Chinese company, surpassing the 2008 purchase of China Netcom Group by China Unicom Hong Kong Ltd for $29 billion.

ChemChina's offer had come eight months after Syngenta spurned a $45-billion unsolicited takeover offer from US rival Monsanto Co, saying that the offer undervalued the company and posed execution risks.

Syngenta, which has 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.

It 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 tyre maker Pirelli in August 2015 in a $7.7-billion deal.

ChemChina was created in 2005 by putting together several chemical firms under China's 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.

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