Marking the largest ever overseas acquisition by a Chinese firm, an agreed $43 billion bid would be made by China's state-owned ChemChina for Swiss seeds and pesticides group Syngenta, the companies said on Wednesday.
This is being seen as a setback for U.S. seed company Monsanto, which made an unsuccessful $45 billion move for Syngenta last year even as the deal accelerates a shake-up in the global agrochemicals industry.
This deal is historic and possibly the largest in terms of China's biggest outbound takeover deal – if it goes through, beating the CNOOC's $17.7 billion purchase of Canada's Nexen in 2012 by more than double the amount.
The shares Syngenta saw a rise of more than 6 percent early on Wednesdaybut traded some way below the agreed offer price of $465 per share, equivalent to 480 francs.
There seems to be no major regulatory hurdles, and noted that ChemChina had secure financing in place for the deal, said Syngenta CEO John Ramsay.
"I think the overall regulatory approvals will not be very challenging," he said on Wednesday. The limited overlap in the two firms' markets is expected to be acknowledged by antitrust regulators, he added. No major hurdle would be posted by the Committee on Foreign Investment in the United States (CFIUS), whose mandate is U.S. national security, he said.
Any rival offers would have to be considered by the board, Ramsay said, adding that the deal was "very appropriate and attractive" to Syngenta shareholders.
About $3 billion has been agreed to be paid by ChemChina, short for China National Chemical Corp., in fees to Syngenta should it fail to meet all requirements for the deal. If the deal falls through for any reasons the Swiss group is accountable for owing ChemChina about $1.5 billion, Ramsay said.
"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 announced today," ChemChina Chairman Ren Jianxin said.
"We will continue to work alongside the management and employees of Syngenta to maintain the company’s leading competitive edge in the global agricultural technology field," Jianxin said.
This attempt is viewed as the latest move in China's quest for Western technology and distribution networks.
Last year's buyout of Italian tyre maker Pirelli by ChemChina was a similar deal.
The acquisition of German industrial machinery maker KraussMaffei Group for about $1 billion was announced by ChemChina in January.
In order to cut reliance on food imports amid limited farm land, a growing population and higher meat consumption, the Chinese government is keen to boost farming productivity.
The US farmers and the farming industry has reduce spending on everything from equipment to seeds and pesticides due to a global glut of corn and soybeans has depressed grain prices for the past three years. Many of the world's largest agricultural companies have been forced to scramble to cut deals driven by the cutbacks, along with pressure from investors and a desire to bolster profit.
Syngenta shareholders could be paid up to 16 Swiss francs per share as dividends which could include a special dividend of 5 francs to be paid conditional on closing following the ChemChina offer.
(Source:www.reuters.com)
This is being seen as a setback for U.S. seed company Monsanto, which made an unsuccessful $45 billion move for Syngenta last year even as the deal accelerates a shake-up in the global agrochemicals industry.
This deal is historic and possibly the largest in terms of China's biggest outbound takeover deal – if it goes through, beating the CNOOC's $17.7 billion purchase of Canada's Nexen in 2012 by more than double the amount.
The shares Syngenta saw a rise of more than 6 percent early on Wednesdaybut traded some way below the agreed offer price of $465 per share, equivalent to 480 francs.
There seems to be no major regulatory hurdles, and noted that ChemChina had secure financing in place for the deal, said Syngenta CEO John Ramsay.
"I think the overall regulatory approvals will not be very challenging," he said on Wednesday. The limited overlap in the two firms' markets is expected to be acknowledged by antitrust regulators, he added. No major hurdle would be posted by the Committee on Foreign Investment in the United States (CFIUS), whose mandate is U.S. national security, he said.
Any rival offers would have to be considered by the board, Ramsay said, adding that the deal was "very appropriate and attractive" to Syngenta shareholders.
About $3 billion has been agreed to be paid by ChemChina, short for China National Chemical Corp., in fees to Syngenta should it fail to meet all requirements for the deal. If the deal falls through for any reasons the Swiss group is accountable for owing ChemChina about $1.5 billion, Ramsay said.
"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 announced today," ChemChina Chairman Ren Jianxin said.
"We will continue to work alongside the management and employees of Syngenta to maintain the company’s leading competitive edge in the global agricultural technology field," Jianxin said.
This attempt is viewed as the latest move in China's quest for Western technology and distribution networks.
Last year's buyout of Italian tyre maker Pirelli by ChemChina was a similar deal.
The acquisition of German industrial machinery maker KraussMaffei Group for about $1 billion was announced by ChemChina in January.
In order to cut reliance on food imports amid limited farm land, a growing population and higher meat consumption, the Chinese government is keen to boost farming productivity.
The US farmers and the farming industry has reduce spending on everything from equipment to seeds and pesticides due to a global glut of corn and soybeans has depressed grain prices for the past three years. Many of the world's largest agricultural companies have been forced to scramble to cut deals driven by the cutbacks, along with pressure from investors and a desire to bolster profit.
Syngenta shareholders could be paid up to 16 Swiss francs per share as dividends which could include a special dividend of 5 francs to be paid conditional on closing following the ChemChina offer.
(Source:www.reuters.com)
