China National Chemical Corp (ChemChina, 中國化工) agreed to buy Swiss pesticide and seeds maker Syngenta AG for more than US$43 billion in cash as the state-backed company extends its shopping spree with what would be the biggest acquisition by a Chinese firm.
ChemChina offered US$465 a share in cash, according to a statement yesterday.
The offer, endorsed by Syngenta’s board, is about 20 percent higher than the stock’s last close of 392.30 Swiss francs (US$385) on Tuesday.
If completed, the deal would help chairman Ren Jianxin (任建新) transform ChemChina into the world’s biggest supplier of pesticides and agrochemicals, while snatching an asset coveted by Saint Louis-based Monsanto Co. It also underscores the importance China attaches to owning seed and cropcare technology that can boost agricultural output and help feed the world’s biggest population.
In addition:
‧ The deal is expected to close by the end of the year
‧ A special dividend of SF5 a share will be paid if the deal closes
‧ ChemChina plans to keep Syngenta’s management, with Ren chairing a 10-person board that will include four of the existing Syngenta board members
‧ ChemChina will also evaluate a possible initial public offering for the business “in the years to come”
‧ Dyalco, JPMorgan Chase & Co, Goldman Sachs Group Inc and UBS Group AG served as financial advisers to Syngenta on the transaction. HSBC Holdings PLC and China Citic Bank International Ltd advised ChemChina
Syngenta had sales of US$13.4 billion last year, mainly from crop protection such such as pesticides and the seeds business. Bolstering agrochemicals would help ChemChina reduce its reliance on petrochemical and petroleum products, which accounted for almost half of the 256.4 billion yuan (US$39 billion) in revenue it had in 2014, the latest annual figures available for the company.
Behind the Chinese company’s pursuit are national interests.
Chinese President Xi Jinping (習近平) is trying to boost agricultural output to maintain self-sufficiency as a growing middle class consumes more grain-intensive meat and farmland is converted to housing and golf courses.
The World Bank estimates that China’s arable land declined 6 percent in the past decade as economic growth boomed.
As well as domination of the Chinese market, Syngenta will provide global access to farmers from Brazil to the UK.
Helping execute that vision is Ren, a 58-year-old executive who started China’s first professional cleaning company with a 10,000 yuan loan and is now emerging as one of the country’s most active dealmakers.
Syngenta would trump all past deals in a country whose appetite for foreign assets is surging. ChemChina’s latest purchase follows other Chinese overseas transactions this year including Haier Group Corp’s (海爾) US$5.4 billion purchase of General Electric Co’s home-appliance business to Dalian Wanda Group Co’s (萬達集團) deal to buy control of Legendary Entertainment.
This year’s tally is on pace to exceed last year’s record US$123.9 billion, according to data compiled by Bloomberg.
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