ChemChina's takeover of Syngenta gets US approval

BEIJING • ChemChina - China National Chemical Corp - has received approval from US national security officials for its takeover of Swiss agrochemical and seed company Syngenta, seen as the biggest regulatory hurdle that the US$43 billion (S$58.1 billion) acquisition faced.

The Committee on Foreign Investment in the United States (CFIUS) has cleared the transaction, the companies said in a statement yesterday. The deal, expected to be completed by the end of the year, is still subject to antitrust review by regulators worldwide.

"The CFIUS approval removes a major potential hurdle and should come as a relief to Syngenta shareholders," Mr Christian Faitz, an analyst at Kepler Cheuvreux, said in a note.

Shares of Syngenta jumped by as much as 12 per cent. Since announcing the deal in February, the stock has traded below ChemChina's bid price amid investor concerns that regulators in the US might block the deal. The takeover is leading a record wave of Chinese acquisitions that has prompted US officials to consider claims that some purchases could threaten national security.

Syngenta, which got more than a quarter of revenue last year from seed and crop protection in North America, would help transform state-owned ChemChina into a global pesticide and agrochemical giant. CFIUS, which is led by the Treasury Department and includes officials from the Defence and State departments, reviews acquisitions of US businesses by foreign investors for risks to American security and can recommend that deals be blocked.

Since announcing the deal in February, the stock has traded below ChemChina's bid price amid investor concerns that regulators in the US might block the deal.

The committee often imposes conditions on transactions before clearing them, such as restricting the foreign company's access to parts of the US business. 

ChemChina is proposing to pay US$465 a share plus a 5 Swiss franc (S$7) special dividend for Syngenta. The deal has come at a time when other major players in the agrochemical and seed industry plan to merge, or are holding talks together.

Dow Chemical is combining with DuPont, and Bayer is targeting genetically-modified seed maker Monsanto. Only BASF has remained on the sidelines of the consolidation wave.

ChemChina and Syngenta are working closely with "numerous regulators around the world" and discussions remain "constructive", they said in the statement. Mr Markus Mayer, an analyst at Baader Helvea Equity, said in a note: "Further anti-trust reviews of different countries shouldn't be such a problem anymore."

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A version of this article appeared in the print edition of The Straits Times on August 23, 2016, with the headline 'ChemChina's takeover of Syngenta gets US approval'. Print Edition | Subscribe