Deal valued at $43 bln would be nation's biggest foreign takeover
China National Chemical Corp, known as ChemChina, announced Wednesday that it has agreed to buy Swiss seeds and pesticides group Syngenta for more than $43 billion, but concerns remain about whether the deal will pass regulatory scrutiny.
ChemChina and Syngenta have reached an acquisition agreement in which the latter's board of directors recommends the offer to shareholders, according to an announcement on ChemChina's website Wednesday.
The offer price is $465 per share, plus a special dividend of 5 Swiss francs ($4.92) per share to be paid to Syngenta shareholders. The offer is at a premium of about 20 percent to Syngenta's Tuesday close of 392.30 Swiss francs.
The intended offer values Syngenta's total outstanding shares at about $43 billion, which will make the deal the biggest-ever overseas takeover by a Chinese company. That record is now held by China National Offshore Oil Corp, which acquired Canada's Nexen for $15.1 billion in 2013.
Syngenta's headquarters will remain in Basel, Switzerland, and its existing management will continue to run the company, the company said in a statement on its website Wednesday.
Syngenta may be relisted in the future, according to both companies' statements. Neither company had commented as of press time.
"It seems kind of -routine for ChemChina to relist its overseas assets," Wang Yumin, a research fellow at Morning Whistle Group, a Shanghai-based provider of merger and acquisition (M&A) information, told the Global Times Wednesday.
For instance, China National Bluestar, a subsidiary of ChemChina, was preparing in 2015 for a listing in Norway of its silicon business Elkem, which the company bought for $2 billion in 2011, Reuters reported in November 2015, citing sources familiar with the matter.
ChemChina has successfully acquired nine leading industrial companies in France, the UK, Israel, Italy and Germany, according to its official website.
The latest announcement mentioned that the deal needs to pass antitrust reviews and get approval from regulatory agencies in relevant jurisdictions, meaning that the deal may face potential risks from regulatory scrutiny.
While ChemChina may have no trouble in passing the antitrust reviews given its limited market share in agribusiness, it is still uncertain whether it will obtain all the required approvals, Wang noted.
As recently as January, US regulators blocked Philips' sale of Lumileds to a consortium led by Chinese investment fund Go Scale Capital. On January 22, the Dutch electronics giant said in a statement that the $3.3 billion deal failed due to opposition from the Committee on Foreign Investment in the United States (CFIUS).
The CFIUS did not disclose its reason for blocking the deal, and it did not respond to a Global Times e-mail requesting an interview as of press time.
With Chinese companies' interest in overseas assets surging recently, some are wondering whether the decision represents a tightening on China's cross-border M&A deals by the US government.
On January 15, Qingdao Haier Co announced to acquire the home appliance business of General Electric Co for $5.4 billion in cash, the third-largest takeover of a US company by a Chinese company. In the same month, Chinese property giant Dalian Wanda Group bought US film studio Legendary Entertainment for $3.5 billion.
"Every case is different. In the case of ChemChina and Syngenta, the deal will have to be submitted to the CFIUS, but whether it can get through remains a question as too many factors may affect the result," Wang said, adding that the regulatory filings need to be prepared by people with skill and experience in such kind of issues.