BEIJING: State-owned China National Chemical Corp (ChemChina) will make an agreed US$43 billion bid for Swiss seeds and pesticides group Syngenta, the companies said yesterday, in what would be the biggest overseas acquisition by a Chinese firm.
The deal accelerates a shake-up in the global agrochemicals industry and represents a setback for US seed company Monsanto, which made an unsuccessful US$45 billion move for Syngenta last year.
If completed, it would be China’s biggest outbound takeover deal, more than double CNOOC’s US$17.7 billion purchase of Canada’s Nexen in 2012.
ChemChina offered US$465 a share in cash, according to a statement yesterday. The offer, endorsed by Syngenta’s board, is about 20 percent higher than the stock’s last close.
Syngenta CEO John Ramsay does not expect major regulatory hurdles, and noted that ChemChina had secured financing for the deal.
“I think the overall regulatory approvals will not be very challenging,” he said yesterday, adding he expected antitrust regulators to acknowledge the limited overlap in the two firms’ markets.
Ramsay said the deal was “very appropriate and attractive” to Syngenta shareholders, but its board would have to consider any rival offers.
He said this deal is set to sharply raise the potential for the company’s seeds business, as well as ensure continuing choice for growers and investment in research and development across technology platforms and across crops.
Ren Jianxin, chairman of ChemChina, said the company will maintain Syngenta’s edge in the global agricultural technology field and respond to and maximize the interests of farmers and consumers around the world.
ChemChina has agreed to pay about US$3 billion in fees to Syngenta should it fail to meet all requirements for the deal. Syngenta will owe ChemChina about US$1.5 billion if the deal falls through for any reasons the Swiss group is accountable for, Ramsay said.
“We will continue to work alongside the management and employees of Syngenta to maintain the company’s leading competitive edge in the global agricultural technology field,” Ren said.
The deal is expected to close by the end of the year
A special dividend of 5 Swiss francs (US$4.92) a share will be paid if the deal closes.
ChemChina plans to keep Syngenta’s management, with Ren chairing a 10-person board that will include four of the existing Syngenta board members.
ChemChina will also evaluate a possible initial public offering for the business “in the years to come.”
Beijing-headquartered ChemChina has been actively acquiring global assets. In 2015, it spent US$7.9 billion in acquiring Italian tire maker Pirelli. In January 2016, it agreed to buy German plastics and rubber machinery maker KraussMaffei Group for US$1 billion.
