The European Commission on Friday opened an in-depth investigation into state-owned China National Chemical Corp’s (ChemChina, 中國化工) 40 billion euro (US$43.94 billion) takeover of Swiss seeds giant Syngenta AG to see if it would hurt competition.
“We need to carefully assess whether the proposed merger would lead to higher prices or a reduced choice for farmers,” EU Competition Commissioner Magrethe Vestager said in a statement.
The deal — the biggest in a series of Chinese overseas acquisitions — would combine Syngenta, a global leader in seeds and crop protection with ChemChina which controls Adama Holding Ltd, the largest supplier of generic crop protection products in Europe.
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“The transaction would take place in an industry that is already relatively concentrated,” the commission said.
In a joint statement, ChemChina and Syngenta said they would “continue constructive discussions with the EU authorities in order to conclude the review as early as possible.”
The commission probe is to run through March 15 next year.
Syngenta said it was confident the deal would go through, having already been cleared in the US and Japan.
The commission said initial investigations showed the new company would have “relatively high combined market shares” in several categories, while ChemChina’s Adama would be removed as a competitor with Syngenta.
Given the global scope of Syngenta and ChemChina, the commission said it would cooperate closely with other competition authorities, notably in the US, Brazil and Canada.
The deal is just one of several huge takeovers in the agrochemical sector, with German giant Bayer AG offering US$66 billion for US firm Monsanto Co, which last year had tried to acquire Syngenta for SU$46 billion.
The commission reiterated that it also has an in-depth probe underway into a proposed tie-up between US chemical giants Dow Chemical Co and DuPont Co valued at US$130 billion, with a decision due on Feb. 6 next year.
If the commission finds fault with a proposed merger, it can reject the deal but more usually it asks the companies to sell parts of the business, or to allow in newcomers so as to minimize the impact on customer choice and price.
Earlier this month, Beijing announced plans to merge ChemChina with Sinochem Corp (中國中化) as part of efforts to reshape China’s — and so the world’s — chemicals industry.
STILL SHORT
It was not immediately clear how this might affect the Syngenta deal, while reports in Beijing-based financial news magazine Caixin said that ChemChina was still short US$15 billion to fund the acquisition.
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