Corporate Finance

ChemChina offers over $43 billion for Swiss agribusiness Syngenta

In what would be the biggest-ever foreign acquisition made by a Chinese company, China National Chemical Corp. (ChemChina) is set to buy Syngenta, a Swiss pesticide and seed manufacturer.

© Garycycles8

In what would be the biggest-ever foreign acquisition made by a Chinese company, China National Chemical Corp. (ChemChina) is set to buy Syngenta, a Swiss pesticide and seed manufacturer.


Awaiting shareholder and regulatory approval, ChemChina is acquiring 100% of Syngenta’s equity, offering about CHF 470 a share, valuing the company at more than $43 billion.

 

ChemChina’s acquisition, which looks to expand Syngenta’s reach across China and emerging markets, will be the biggest ever purchase by a Chinese company, and the second biggest takeover in the chemicals industry over the past year. The merger between the U.S. giants, DuPont and Dow Chemical, was valued at $68.6 billion, claiming top spot. The deal does, however, surpass China Unicom Hong Kong Ltd.’s $29 billion acquisition of China Netcom Group Corp. in 2008.

 

ChemChina is the largest chemical corporation in China, with a reliance on petrochemical and petroleum products, which, according to Bloomberg data, accounted for nearly half of its $39 billion 2014 revenue. Syngenta would become the largest agribusiness in China, serving the needs of the growing middle class consumers, in a country where arable land has declined 6% in the last decade.

 

Syngenta will remain headquartered in Switzerland, continuing to operate under the same brand name. The Swiss company’s board of directors said that it is “unanimously recommending the offer to shareholders”, stating its aims to continue to promote the highest environmental standards and nurture rural communities.

 

The Swiss giant had recently been through the negotiation process, with ChemChina’s competitor, St-Louis-based Monsanto Co., having thrice refused a deal for $46 billion. Syngenta’s choice of ChemChina can be explained by a preference for expansion into the Chinese market and the emerging markets. This move sees the Chinese actor leapfrog Monsanto to becoming the world’s leading supplier of pesticides and agrochemicals.

 

Already in 2016, ChemChina has carried out the acquisition of German machinery maker KraussMaffei Group for about $1 billion and acquired a 12% stake in another Swiss company, Mercuria Energy Group, following on from its $8 billion takeover of Pirelli in 2015.

 

 

F. A. E. M.

interview

Accenture's CEO and CFO interview by Leaders League Group

About us

Download