Chinese set to take over Syngenta

China National Chemical Corporation (ChemChina) underlined its credentials as China’s most aggressive offshore state-owned acquirer with a $43 billion bid for Syngenta that would, if successful, mark the largest-ever offshore acquisition by a Chinese company.

The bid, announced at $465 per share, plus a dividend of SFr5, values Syngenta at SFr480 a share – a little above the revised SFr470 a cash-and-shares offer which Monsanto submitted in mid-August, but which was pulled after the Swiss group failed to engage in takeover talks.

China’s state-owned ChemChina is nearing a deal to take over Swiss seeds and pesticides group Syngenta for roughly 470 Swiss francs ($460.5) per share, two people familiar with the matter told Reuters on Tuesday.

Syngenta’s decision to accept ChemChina’s offer is a setback for Monsanto, the genetically modified seed producer, which has also tried to buy the Basel-based company.

Syngenta’s board has recommended ChemChina’s offer to purchase 100 per cent of Syngenta’s equity.

ChemChina already has bridge financing in place for the all-cash deal that is the biggest acquisition by a Chinese firm.

DuPont and Dow Chemical Co agreed in December to combine in an all-stock merger valued at $130-billion in a first step towards breaking up into three separate businesses, a move that was seen as a trigger for further consolidation. To seal the deal, the companies now have to cross potentially high regulatory hurdles in the U.S. – about a quarter of Syngenta’s sales come from North America – and elsewhere.

“For many Chinese companies making strategic acquisitions, the primary driver would be whether the asset fits in with the company’s long-term growth strategy, rather than merely focusing on buying the asset at a cheap price”.

Sygenta chief executive officer John Ramsay said: “Syngenta is the world leader in crop protection…”

However, the merger would boost the group’s “presence in emerging markets, and notably in China”, a joint statement from the group said.

The Syngenta deal easily dwarfs other big deals with a Chinese company as the acquirer.

In January of this year, ChemChina reported it had bought a 12-percent stake in Swiss energy and commodities trader Mercuria, also in a bid to expand its portfolio.

According to Demaré, Syngenta will remain Syngenta and will continue to be headquartered in Switzerland. 70 in early deals, up 6.2% on the day, but well short of the ChemChina offer.

Chinese interests have big investments in the UK.

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.

“China’s agricultural imports reflect its relative scarcity of land resources, and its most prominent imports are oilseeds, oils, and cotton – products that have high land requirements per unit of output”, the USDA said in a report.