A $42 Billion takeover offer by state-owned China National Chemical Corp has reportedly been rejected by the world's largest agrichemicals company, Syngenta AG.
This news has raised the shares of the company.
The company had turned down a $47 billion takeover offer from Monsanto Co earlier this year and since then the company has been under pressure to boost shareholder returns.
Following the turndown of the offer, the chief executive of Syngeta stepped down two months later.
News agency Bloomberg reported that the Swiss-based company was still in talks with ChemChina as well as other suitors, and that a deal could be reached within weeks.
On Friday, following the report of the rejection, Syngenta's Swiss-listed shares opened more than 11 percent higher and were trading up 7.2 percent at 370.90 Swiss francs by 0521 ET.
News reports said that Syngenta had turned down the offer due to regulatory concerns but there was no elaboration of the issue.
A ChemChina spokeswoman said the company had nothing to announce when asked about the media reports. There was no comments from Syngenta.
Acquiring Syngeta’s 19 percent market share would catapult ChemChina to the industry leader position as the Chinese company already has a 5 percent share of the global crop chemicals through its ownership of Israeli generic pesticides maker Adama.
Industry experts are of the opinion that the acquisition of Syngenta would help ChemChina to increase its technological know-how in the Chinese market as well as further its ambitions to expand further internationally.
ChemChina is known to engage in aggressive acquisition of Western companies specially in chemicals businesses. The companies in which the Chinese company has shown interest include big names like the Norwegian silicon business Elkem, French feed additives maker Adisseo, Australian plastics maker Qenos and most recently Italian tyremaker Pirelli.
"Future demand for pesticides globally will stay strong, particularly for a country like China, which is trying to boost grains production," Duan Yousheng, an analyst with China Pesticides Industry Association, said.
"Syngenta has sales channels in over 120 countries and it is a world leader in research, and pesticide sales volume. Only (a)state-owned firm is able to make such offer," he added.
According to a report published by Bloomberg, 449 Swiss francs per share, or 41.7 billion Swiss francs ($41.72 billion) was the initial offer that ChemChina had made and the value that the Chinese company had fixed for the agricultural chemicals group.
Earlier this year, the same price was proposed by Monsanto in talks with Syngenta's management but it wanted to pay 55 percent of that in shares of the combined group.
A revised cash-and-stock deal proposal that was worth 470 Swiss francs per share was abandoned by Monsanto in August.
As Monsanto's stock price fell amid a slump in global commodity demand that is putting pressure on companies for more economies of scale, the value of the bid declined to 433 francs during August.
Since Monsanto walked away in late August, before Friday, Syngenta shares were down more than 8 percent.
Questioning the company's ability to improve its financial fortunes as demand for agricultural commodities remains weak, a section of the shareholders have chided the Swiss group's management for its defensive stance.
To appease shareholders, Syngenta announced plans in September to buy back more than $2 billion of stock, funding the measure by selling its vegetable seeds business.
(Source:www.bloomberg.com & www.reuters.com)
This news has raised the shares of the company.
The company had turned down a $47 billion takeover offer from Monsanto Co earlier this year and since then the company has been under pressure to boost shareholder returns.
Following the turndown of the offer, the chief executive of Syngeta stepped down two months later.
News agency Bloomberg reported that the Swiss-based company was still in talks with ChemChina as well as other suitors, and that a deal could be reached within weeks.
On Friday, following the report of the rejection, Syngenta's Swiss-listed shares opened more than 11 percent higher and were trading up 7.2 percent at 370.90 Swiss francs by 0521 ET.
News reports said that Syngenta had turned down the offer due to regulatory concerns but there was no elaboration of the issue.
A ChemChina spokeswoman said the company had nothing to announce when asked about the media reports. There was no comments from Syngenta.
Acquiring Syngeta’s 19 percent market share would catapult ChemChina to the industry leader position as the Chinese company already has a 5 percent share of the global crop chemicals through its ownership of Israeli generic pesticides maker Adama.
Industry experts are of the opinion that the acquisition of Syngenta would help ChemChina to increase its technological know-how in the Chinese market as well as further its ambitions to expand further internationally.
ChemChina is known to engage in aggressive acquisition of Western companies specially in chemicals businesses. The companies in which the Chinese company has shown interest include big names like the Norwegian silicon business Elkem, French feed additives maker Adisseo, Australian plastics maker Qenos and most recently Italian tyremaker Pirelli.
"Future demand for pesticides globally will stay strong, particularly for a country like China, which is trying to boost grains production," Duan Yousheng, an analyst with China Pesticides Industry Association, said.
"Syngenta has sales channels in over 120 countries and it is a world leader in research, and pesticide sales volume. Only (a)state-owned firm is able to make such offer," he added.
According to a report published by Bloomberg, 449 Swiss francs per share, or 41.7 billion Swiss francs ($41.72 billion) was the initial offer that ChemChina had made and the value that the Chinese company had fixed for the agricultural chemicals group.
Earlier this year, the same price was proposed by Monsanto in talks with Syngenta's management but it wanted to pay 55 percent of that in shares of the combined group.
A revised cash-and-stock deal proposal that was worth 470 Swiss francs per share was abandoned by Monsanto in August.
As Monsanto's stock price fell amid a slump in global commodity demand that is putting pressure on companies for more economies of scale, the value of the bid declined to 433 francs during August.
Since Monsanto walked away in late August, before Friday, Syngenta shares were down more than 8 percent.
Questioning the company's ability to improve its financial fortunes as demand for agricultural commodities remains weak, a section of the shareholders have chided the Swiss group's management for its defensive stance.
To appease shareholders, Syngenta announced plans in September to buy back more than $2 billion of stock, funding the measure by selling its vegetable seeds business.
(Source:www.bloomberg.com & www.reuters.com)
