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ChemChina Offers to Acquire Syngenta

Acquisitions continue in the agricultural chemical/seed/trait arena. This morning, Syngenta announced that ChemChina has offered to buy it at a value of over $43 billion. 

The deal comes on the heels of an offer Syngenta turned down last August, when Monsanto offered to buy it for $47 billion. The acquisition also follows a consolidation trend in this space started last December by the Dow-DuPont merger. 

In a press release, the firms say a Swiss and U.S. tender offer will commence in the coming weeks. The transaction is expected to conclude at year’s end.

Under the agreement, Syngenta’s existing management will continue to run the company. The board of directors, though, will be chaired by Ren Jianxin, ChemChina chairman. It will include four existing Syngenta board members. For now, Syngenta will remain headquartered in Switzerland and will retain its name. 

What’s Next?
Syngenta shareholders were miffed after the Monsanto talks ceased last August, and voted with their feet. Syngenta AG stock has decreased from $81.37 per share on the close of August 24 — shortly before the Monsanto talks collapsed — to a September 25 close of $62.95 per share. 

However, talk of the ChemChina-Syngenta deal caused Syngenta stock to shoot back to yesterday’s close of $78.57, a 6.2% move up in the day’s trading.  

Bear in mind that deals like this one and the Dow-DuPont merger must pass the eye of regulators and legislators. Sometimes, these deals are also disrupted by offers from competing firms. 

Sen. Charles Grassley (R-IA) has said the DuPont-Dow merger demands serious scrutiny. “Vigorous enforcement of the antitrust laws is imperative to maintaining an open, fair, and competitive marketplace,” said Grassley of the Dow-DuPont merger in a prepared statement. 

What the Suits Are Saying
The executives who helped engineer this transaction, though, are bullish on the move. Here’s what they’re saying.

“The transaction minimizes operational disruption; it is focused on growth globally, specifically in China and other emerging markets, and enables long-term investment in innovation. Syngenta will remain Syngenta and will continue to be headquartered in Switzerland, reflecting this country’s attractiveness as a corporate location,” said Michel Demaré, chairman of Syngenta in a prepared statement. 

“Syngenta is the world leader in crop protection having significantly increased its global market share over the last 10 years. This deal will enable us to maintain and expand this position, while at the same time significantly increasing the potential for our seeds business. It will ensure continuing choice for growers and ongoing R&D investment across technology platforms and across crops. Our commitment to cost and capital efficiency will remain unchanged,” said John Ramsay, chief executive officer in a prepared statement. 

“We will continue to work alongside the management and employees of Syngenta to maintain the company’s leading competitive edge in the global agricultural technology field. Our vision is not confined to our mutual interests, but will also respond to and maximize the interests of farmers and consumers around the world. We look forward to Michel Demaré remaining on the board as vice chairman and lead independent director, and to working with John Ramsay and the management and employees of Syngenta to deliver safe and reliable solutions for the continued growth in global food demand,” said Ren Jianxin, chairman of ChemChina, in a prepared statement.

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