ChemChina bids US$43b for Syngenta

Swiss-based Syngenta, the world’s biggest agrichemicals group, said that its board had unanimously agreed the cash offer by ChemChina – the Beijing-based chemicals giant which previous year bought Italian tyremaker Pirelli, and last month announced the purchase of German industrial machinery maker KraussMaffei Group.

It’s a play on the key global issue of food security – a particular concern for China, the world’s most populous country whose middle class is growing fast. Maggie Lake of CNN joins Here & Now’s Jeremy Hobson with details.

The background is that years of intensive agriculture along with overuse of chemicals has degraded land and poisoned water supplies, leaving China increasingly vulnerable to crop shortages.

These are to be paid immediately before the closing of the deal, Syngenta said, after it accepted ChemChina’s offer.

Michel Demaré, Syngenta’s chairman, said the takeover did not mean Syngenta would now be controlled by the Chinese government and that ChemChina, which has been on an acquisition spree, understood the importance of giving businesses autonomy. There is “very little antitrust risk” for the takeover, he said. The offer, endorsed by Syngenta’s board, is equivalent to 480 Swiss francs, which is about 20 percent higher than the stock’s last close. Syngenta will owe ChemChina about $1.5 billion if the deal falls through for any reasons the Swiss group is accountable for, Ramsay said.

The company rejected its approaches, leaving some investors unhappy that Syngenta had not entered into talks with the United States company.

“The discussions between our two companies have been friendly, constructive and co-operative, and we are delighted that this collaboration has led to the agreement”, ChemChina Chairman Ren Jianxin said.

“ChemChina has a very ambitious vision of the industry in the future”.

ChemChina has offered US$465 per share with Syngenta shareholders to receive an additional US$10.95 in May 2016, according to a statement released by Syngenta on 3 February.

In 2015 USA agricultural company Monsanto, which is a shade larger than Syngenta on a revenue basis, mounted a takeover bid for the Swiss company.

But seeds have become a sensitive global issue.

The acquisition also follows a consolidation trend in this space started last December by the Dow-DuPont merger.

Syngenta was advised by Dyalco, the one-man business of former Goldman Sachs M&A head Gordon Dyal, alongside JP Morgan, Goldman Sachs and UBS while HSBC and China CITIC Bank International advised ChemChina.