US approves $43-bn ChemChina-Syngenta deal

22 Aug 2016


The US committee overseeing deals that could threaten national security today approved State-owned China National Chemical Corp's (ChemChina) $43-billion acquisition of Swiss chemical company Syngenta AG.

Both companies said that the Committee on Foreign Investment in the US (CFIUS), has cleared the transaction, and expect the deal to be completed by the end of the year.

''In addition to CFIUS clearance, the closing of the transaction is subject to anti-trust review by numerous regulators around the world and other customary closing conditions. Both companies are working closely with the regulatory agencies involved and discussions remain constructive,'' both companies said in a statement.

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

The approval from CFIUS removes one of the biggest hurdles for the deal, since a quarter of Syngenta's sales are generated from North America.

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.

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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