Syngenta, the Swiss-based agrochemicals and seed company, said Wednesday that it has agreed to a $43 billion cash offer from the China National Chemical Corporation (ChemChina). This deal is the most ambitious foreign takeover attempt by a Chinese company to date. Syngenta was earlier pursued by Monsanto; however, Monsanto never made a formal offer.
Syngenta said that the agreed upon offer amounted to $465 a share, plus a special dividend of five Swiss francs ($4.91) a share to be paid immediately before the deal’s closing.
For Syngenta, the deal holds the prospect of new capital and a greater access to the huge China market. The acquisition would assist ChemChina in growing Syngenta’s business in China and other emerging markets and help to gain a foothold in the United States. Acquiring Syngenta’s intellectual property is also attractive as the Swiss company develops genetically engineered seeds that my further open the tightly-regulated Chinese market for biotech crops.
Syngenta Chief Operating Officer Davor Pisk told reporters that the $43 billion offer for all shares, which has been approved unanimously by the Syngenta board, is better for all stakeholders including farmers, because it “preserves choice” at a time of increasing consolidation in the industry. The offer is subject to approval by two-thirds of Syngenta stockholders and regulatory authorities. “It is a clear commitment that Syngenta retains its identity and strategy,” Pisk said. “It will continue to be headquarters here in Switzerland.”
To ink the deal, the companies must cross potentially high regulatory hurdles in the United States as a quarter of Syngenta’s sales come from North America and elsewhere. In addition to antitrust authorities, a U.S. interagency committee has the power to block deals that pose a threat to U.S. national security.
In terms of regulatory approvals of the Chinese offer, “I don’t anticipate there being any impact there,” Pisk said. “We will continue to try to satisfy the needs of Chinese regulators to the best of our ability.” Pisk pointed out that there is one process for Chinese regulatory approvals whether it is for Chinese or foreign companies.
The Syngenta deal comes is on the heals of the DuPont and Dow Chemical merger. If the Syngenta deal goes forward, it would be larger that the formerly U.S.-owned Smithfield acquisition by WH Group in 2013.
