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ChemChina offers $43 billion for Swiss pesticide giant Syngenta

ChemChina-Syngenta deal

Ren Jianxin, chairman of ChemChina, and Michel Demaré, chairman of Syngenta, shake hands in Basel, Switzerland on Feb. 3. 

(Georgios Kefalas / Keystone )

A Chinese state-owned chemical maker offered to buy Swiss pesticide giant Syngenta for $43 billion in what would be the biggest-ever foreign acquisition by a Chinese company.

Syngenta said Wednesday that its board is recommending shareholders accept the offer from China National Chemical Corp., also known as ChemChina. Basel-based Syngenta said in a statement that ChemChina’s cash offer is worth about $480 a share, including a special dividend for shareholders of about $5 if the deal goes through.

The deal is part of a global acquisition spree by Chinese companies, which are diversifying abroad to counter a slowdown at home while also seeking foreign expertise and technology. Last month, Chinese home appliance maker Haier Group bought General Electric’s home appliance business, and conglomerate Wanda Group acquired Hollywood movie studio Legendary Entertainment.

The Syngenta deal, if completed, would overtake CNOOC’s 2012 purchase of Canadian energy company Nexen as the biggest foreign acquisition by a Chinese company, according to Dealogic data.

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Beijing-based ChemChina would keep existing Syngenta management in place. The deal is expected to be completed by the end of the year. ChemChina said it would also consider an initial public offering of the business “in the years to come.”

“We think it’s a very good deal for Syngenta and all the stakeholders will benefit,” Syngenta Chairman Michel Demaré said in a video posted on the company’s website.

Last month, ChemChina bought German machinery maker KraussMaffei for about $1 billion and took a 12% stake in Swiss energy trader Mercuria. In March, it bought Italian tire manufacturer Pirelli.

The Syngenta deal is also part of a shake-up of the global agricultural and chemical industry, which is being pressured by tumbling commodity prices that are causing farmers to spend less on seeds, pesticides and equipment. Syngenta reported Wednesday that net income for 2015 fell 17% to $1.3 billion as it struggled with low crop prices, instability in emerging markets and currency fluctuations.

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For China, it’s an opportunity to beef up its expertise in the “ag-chem” industry as part of President Xi Jinping’s plan to modernize the country’s farms to keep up with demand from a rising middle class.

“Our vision for Syngenta is all about growth,” ChemChina Chairman Ren Jianxin said in a video posted online. “We see big opportunities for the company to expand its presence in emerging markets and notably in China, where there is rapid modernization driven by the need to increase grain productivity and increase food quality.”

Syngenta agreed to the takeover bid after spurning a $46.5-billion offer from agricultural giant Monsanto.


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