Zurich | Reuters — A U.S. regulator has cleared ChemChina’s US$43 billion takeover of Swiss pesticides and seeds group Syngenta, the companies said Monday, boosting chances that the largest foreign acquisition ever by a Chinese company will go through.
The decision should remove significant uncertainty over whether the acquisition of the world’s largest pesticides maker will be completed.
Syngenta shares ended trading on Friday at 380.80 Swiss francs (C$512), some 100 francs less than ChemChina’s offer valued the company at. They were indicated 16 per cent higher in premarket activity.
Reuters had reported earlier that the acquisition was in the final stages of being cleared by the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for national security implications.
“China National Chemical Corporation (ChemChina) and Syngenta today announced that the companies have received clearance on their proposed transaction from the Committee on Foreign Investment in the United States (CFIUS),” a joint statement released by Syngenta said.
The statement made no mention of any concessions required to win clearance.
“In addition to CFIUS clearance, the closing of the transaction is subject to anti-trust review by numerous regulators around the world and other customary closing conditions. Both companies are working closely with the regulatory agencies involved and discussions remain constructive.
“The proposed transaction is expected to close by the end of the year,” it said.
Syngenta had said in July it expected the deal to close this year despite concerns that U.S. regulators could throw a spanner in the works.
Syngenta’s share price has significantly lagged ChemChina’s offer of $465 per share plus a five-franc special dividend amid concerns that the deal would get through CFIUS. Syngenta derives about a quarter of its sales from North America.
Several U.S. lawmakers wrote to Treasury Secretary Jacob Lew this year asking for CFIUS to subject the deal to additional scrutiny over its impact on domestic food security. The U.S. Department of Agriculture also joined the CFIUS review, Reuters previously reported.
Syngenta had said this year it would make a voluntary filing with CFIUS “even though no obvious national security concerns were identified during due diligence”.
Unveiled in February, the deal comes as China looks to secure food supplies for its population.
Syngenta is a key player in the market for pesticides and seeds. It has facilities in North Carolina, as well a presence in California, Delaware, Iowa and Minnesota among other states.
The CFIUS review is being watched closely by Monsanto, the world’s largest seed company, which is deliberating whether it should sell itself to Germany’s Bayer. Syngenta last year turned down offers to be acquired by Monsanto.
With a growing number of Chinese companies looking to acquire U.S. peers, CFIUS had emerged as a significant risk for such deals, particularly those with potential cybersecurity implications.
For example, in February, state-backed Chinese firm Unisplendor Corp. scrapped a US$3.78 billion investment in Western Digital Corp. after CFIUS said it would investigate the transaction.
— Reporting for Reuters by Greg Roumeliotis and Michael Shields in Zurich.