ChemChina’s $43bn purchase of seed giant clears United States hurdle

ChemChina made its move for the business when Monsanta, which also has significant operations in Cambridge – at Cambourne Business Park – courted Syngenta investors with a $46bn cash and stock offer, which melted away in August 2015.

A USA national security regulator has approved a state-owned China National Chemical Corp.’s planned $43-billion (38 billion-euro) takeover of Swiss pesticide and seed giant Syngenta, the two companies said on Monday. However, its shares have lagged well behind ChemChina’s $465 per share offer.

Meanwhile, Ren Jianxin, Chairman of ChemChina, said that the discussions between the two companies had been friendly, constructive and co-operative. Last year, ChemChina bought Italian tire maker Pirelli for about $8 billion at current exchange rates.

Today, around 380 staff are employed at Syngenta’s base in Huddersfield, where the company makes crop protection products that help growers meet the increasing demand for food, feed and fuel. Shares in Syngenta jumped over 11 percent to 423 Swiss francs on Monday’s news of the security clearance.

The fact that the USA regulators now see no national security obstacle to the deal means it is more likely to close by the end of the year. “Obviously it is very interested in securing food supply for 1.5 billion people and as a result knows that only technology can get them there”.

But getting the nod from CFIUS, a U.S. interagency committee that has the power to block deals deemed to be posing a threat to national security, removes one of the biggest hurdles for the massive deal.

A quarter of its revenue came from sales in North America a year ago and politicians in major agricultural states in the U.S. had urged Washington to closely scrutinise the deal.

Syngenta, which is headquartered in North Carolina and generates almost a quarter of its revenue from North America, is a key player in the market for pesticides and seeds. It has facilities in North Carolina, as well a presence in California, Delaware, Iowa and Minnesota among other states. Reuters had reported earlier that the acquisition was in the final stages of being cleared by the United States panel.

Apart from the ChemChina-Syngenta deal, Dow Chemical Co (NYSE:DOW) and Du Pont are nearing a merger.

Although the CFIUS’ approval was essential, the arrangement must still be cleared by regulators in other countries and regions, notably the European Union.

Earlier this year, Chinese firm Unisplendor Corp scrapped its decision to invest $3.78 billion in Western Digital Corp, after the CFIUS raised concerns about the transaction.