China's biggest overseas buy seen in $43B Syngenta offer
BEIJINGFeb 04, 2016 - 12:00 am GMT+3
Feb 04, 2016 12:00 am
State-owned China National Chemical Corp Wednesday offered $43 billion in an agreed takeover for Swiss pesticide and seed giant Syngenta, in what would be by far the biggest-ever overseas acquisition by a Chinese firm. The deal is the latest in a string of overseas investments for China's biggest chemical company, also known as ChemChina, as Beijing prods its companies to "go out" to expand.
Syngenta's board recommended the offer of $465 a share, plus a special dividend, to its shareholders, saying in a statement that "the proposed transaction respects the interests of all stakeholders." The statement said the deal "will enable further expansion of Syngenta's presence in emerging markets and notably in China." But it could face challenges before going through. The Swiss company reportedly rejected a higher $47 billion bid from rival Monsanto in August last year, and the U.S. agribusiness giant could come back with a counter-offer. The transaction is also likely to face regulatory hurdles - much of Syngenta's business is in the U.S., where a $18.5 billion offer by Chinese state-owned energy company CNOOC for American rival Unocal failed in 2005 in the face of political pressure. An analyst at Germany's Baader Bank said prior to the announcement that a deal would be welcomed by investors given the size, however, "it could pose political problems."
The offer far outstrips China's biggest overseas acquisition to date, CNOOC's purchase of Canada's Nexen for $15.1 billion in 2013. It is also bigger than China Unicom Hong Kong Ltd's purchase of China Netcom Group Corp for $28 billion in 2008, according to data from Bloomberg. The Chinese government has encouraged its companies to invest abroad to secure raw materials and markets, while growth is slowing at home.The deal is the latest in a string of acquisitions by ChemChina, which last month bought a 12 percent stake in Swiss energy and commodities trader Mercuria to expand its portfolio. Also in January, the Chinese company said it planned to buy Germany's KraussMaffei Group or 925 million euros. Syngenta said its existing management will continue to run the company, which will remain headquartered in Switzerland.