China's state-owned ChemChina will make an agreed $43 billion bid for Swiss seeds and pesticides group Syngenta, the companies said on Wednesday, marking the largest ever overseas acquisition by a Chinese firm.
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The deal accelerates a shake-up in the global agrochemicals industry and is a setback for U.S. seed company Monsanto, which made an unsuccessful $45 billion move for Syngenta last year.
If completed, it would be China's biggest outbound takeover deal, more than double CNOOC's $17.7 billion purchase of Canada's Nexen in 2012.
Syngenta shares rose more than 6 percent early on Wednesday, but, at around 418 Swiss francs, traded some way below the agreed offer price of $465 per share, equivalent to 480 francs.
Syngenta CEO John Ramsay said he sees no major regulatory hurdles, and noted that ChemChina had secure financing in place for the deal.
"I think the overall regulatory approvals will not be very challenging," he told Reuters on Wednesday, adding he expected antitrust regulators to acknowledge the limited overlap in the two firms' markets. He said the Committee on Foreign Investment in the United States (CFIUS), whose mandate is U.S. national security, would not pose a major hurdle.
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Ramsay said the deal was "very appropriate and attractive" to Syngenta shareholders, but its board would have to consider any rival offers.
ChemChina, short for China National Chemical Corp., has agreed to pay about $3 billion in fees to Syngenta should it fail to meet all requirements for the deal. Syngenta will owe ChemChina about $1.5 billion if the deal falls through for any reasons the Swiss group is accountable for, Ramsay said.
"The discussions between our two companies have been friendly, constructive and co-operative, and we are delighted that this collaboration has led to the agreement announced today," ChemChina Chairman Ren Jianxin said.
"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."
The agreement is the latest move in China's quest for Western technology and distribution networks.
Similar deals include last year's buyout of Italian tyre maker Pirelli by ChemChina. In January, ChemChina announced the acquisition of German industrial machinery maker KraussMaffei Group for about $1 billion.
The Chinese government is keen to boost farming productivity as it seeks to cut reliance on food imports amid limited farm land, a growing population and higher meat consumption.
A global glut of corn and soybeans has depressed grain prices for the past three years, prompting U.S. farmers to reduce spending on everything from equipment to seeds and pesticides. The cutbacks, along with pressure from investors and a desire to bolster profit, have sent many of the world's largest agricultural companies scrambling to cut deals.
The ChemChina offer will allow for dividend payments to Syngenta shareholders of up to 16 Swiss francs per share, including a special dividend of 5 francs to be paid conditional on closing, they added.
(Reporting by Ludwig Burger and Michael Shields; Editing by Lincoln Feast and Ian Geoghegan)