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Chinese takeover of Swiss seed giant hits a snag

The takeover of Swiss pesticide and seed giant Syngenta by state-owned China National Chemical Corp. hit a snag.

Published: October 10, 2016, 11:28 am

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    The Basel-based company is preparing for Chinese ownership after Syngenta rebuffed US-rival Monsanto three times last year before accepting the ChemChina’s offer.

    The company, also known as ChemChina, said the offer for all Syngenta’s shares in what would be by far the biggest-ever overseas acquisition by a Chinese firm, was cleared by American authorities.

    But a crucial $15 billion piece of funding was still missing, the cornerstone to the highly leveraged financing arrangement is $15 billion to be injected into the deal. But it remains unclear who will provide these funds, according to people close to the bank lenders.

    The proposed $43 billion takeover is the biggest overseas offer ever made by a Chinese company. It has received attention worldwide in part because it needs the approval of Chinese, American and European authorities. The transaction is expected to close by year end, after US national security officials gave it the nod last month.

    The takeover comes amid an unprecedented wave of consolidation within the sector.

    Faced with a slowdown in agricultural markets due to lower crop prices, there may be added emphasis on further lowering of costs at Syngenta as competitors consolidate to boost efficiency.

    The proposed merger, another in the sector, with German chemicals and pharmaceuticals giant Bayer having made a $66 offer for Monsanto is on the cards. Dow Chemical Co. is merging with DuPont too, while Bayer AG is advancing the takeover of Monsanto Co.

    Syngenta AG Chief Executive Officer Erik Fyrwald will be tabling a new strategic plan for the world’s largest agrochemical company, soon to be acquired by the Chinese for $43 billion.

    Insiders maintain that the marriage will be largely about internal communication with Syngenta’s Chinese parent, which plans to keep the Swiss company mostly intact.

    Those familiar with the deal say they do not expect significant antitrust concerns, even with ChemChina having a controlling say in Adama, a generic agrochemical company. The Chinese company bought Adama Agricultural Solutions Ltd. of Israel in 2011 and took it private.

    karin@praag.org

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