ChemChina Offers To Buy Syngenta For Over $43B

China National Chemical Corp (ChemChina, 中國化工) agreed to buy Swiss pesticide and seeds maker Syngenta AG for more than US$43 billion in cash as the state-backed company extends its shopping spree with what would be the biggest acquisition by a Chinese firm.

If it goes through, the deal would be the largest overseas takeover ever carried out by a Chinese corporation, according to Dealogic, which tracks mergers and takeovers.

State-owned ChemChina has offered 480 Swiss francs a share in Syngenta and the stock rose 5.8% to 415 Swiss francs in Zurich on Wednesday. When the acquisition is completed, Syngenta’s existing management will continue to run the company, with ChemChina chairman Ren Jianxin sitting at the helm of Syngenta’s 10-member Board of Directors – which will include four of the Swiss firm’s existing board members. Meanwhile, Syngenta’s Michel Demaré spoke in favour of the deal and said that it would “minimise operational disruption”, help the company focus on growing globally with specific interest on China and other emerging markets, and drive “long-term investments in innovation”. A Swiss and US tender offer will commence in the coming weeks, and the board expect the transaction to be concluded by the year’s end. More recently, ChemChina said in January it would acquire German equipment maker KraussMaffei Group as part of a consortium of investors for about $1 billion. It said it would also consider an initial public offering of the business “in the years to come”. “There were discussions that took place and there were some topics that were discussed, but nothing that was formally tabled and that we would be able to look alongside what we have here from ChemChina, which is an all-cash offer”.

The chemical industry continues to consolidate, with titans Dow Chemical and DuPont two months ago making a $130 billion deal to create the world’s largest chemical company. Chinese companies – with the strong support of their government – have sought to gain technology and know-how from abroad, while also opening up new markets to drive sales overseas as demand at home slows.

The board of Swiss-based Syngenta, the world’s biggest agrichemicals group, has approved a $43bn takeover from ChemChina, the Chinese chemical giant.

Mr Demare said the attitude of ChemChina was “extremely exciting for Syngenta”.

The Times also noted that commodity prices have slumped since Monsanto made its play, “decreasing the chances of a big payday for Syngenta”.

John Ramsay, CEO of Syngenta expressed joy at the bid which he said is “very appropriate and attractive”, adding that ChemChina has a solid financial backing and that there won’t be any problems to thwart the deal. “You have a Chinese state-owned company that is buying something that, even though it’s not intellectual property, it is important to the food chain”. Chairman Ren Jianxin is credited with building the company through an aggressive string of foreign investments.