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Just A Day After U.S. Clearance, EU Nod For Syngenta Deal Given To ChemChina


04/07/2017


Just A Day After U.S. Clearance, EU Nod For Syngenta Deal Given To ChemChina
China’s largest foreign acquisition was brought closer to the finish line a day after the U.S. gave its blessing as China National Chemical Corp won European Union antitrust approval for its $43 billion takeover of Swiss pesticide maker Syngenta AG.
 
The European Commission said in an emailed statement that the EU will be allowed to clear the deal and "problematic overlaps" would be removed by ChemChina’s offer to divest some pesticides and other agricultural products.
 
Based on a proposed divestment that fell short, EU Competition Commissioner Margrethe Vestager has blocked another deal but at a news conference she praised the companies for being "prepared to address our concerns" with the concessions.
 
As a condition for completing the deal, the U.S. required the companies to divest three types of pesticides. By the end of June, the companies expect to close the deal. Chinese antitrust authorities still need to clear the deal.
 
One of a trio of mega-deals that would reshape the global agrochemicals industry is this takeover that was announced a year ago. After winning over EU approval with hefty concessions last week, Dow Chemical Co’s $77 billion bid to merge with DuPont Co. cleared its biggest hurdle last week. For its purchase of Monsanto Co., Bayer AG still needs approval. With one American, one German and one Chinese, the combined transactions would whittle six industry players to three behemoths.
 
According to data provided by research firm Rhodium Group, Chinese foreign direct investment in America reached a record $45.6 billion on 2016 which sparked off concerns and hence the deal comes amid a wave of Chinese investment overseas.
 
Before a meeting with President Xi Jinping of China, “trade abuse” that contributes to U.S. trade deficits with foreign countries have been asked to be identified by President Donald Trump has in a study. He has previously called for tariffs on Chinese goods and accused China of carrying out unfair trade practices that hurt U.S. workers.
 
Removing what had been seen as the biggest hurdle, last August, the ChemChina-Syngenta deal was cleared by a U.S. national security panel.
 
At the head of a chemicals giant that sells products as varied as rubber tires, pesticides and genetically modified crop seeds would be ChemChina Chairman Ren Jianxin if the deal is completed.
 
As farmland is converted to housing and golf courses and as a growing middle class consumes more grain-intensive meat in China, the ambitions for food security are growing in China and this is behind the state-owned ChemChina’s pursuit of Syngenta. Global access to farmers from Brazil to the U.K. would be provided by Syngenta.
 
“Syngenta will stay Syngenta” and will keep its headquarters in Basel, the company’s Chief Executive Officer, Erik Fyrwald, said in a Bloomberg interview last month.
 
He had been told that ChemChina management wouldn’t be coming to Syngenta and he expected to keep his job, he said.
 
“We’re not integrating with ChemChina,” Fyrwald said. “There’ll be ChemChina members coming onto our board. The chairman will be Chairman Ren from ChemChina. But we fully expect to operate as we do today.”
 
(Source:www.bloomberg.com)