China’s state-owned chemical company, ChemChina, has made a $43bn takeover bid for the Swiss-based seed and agrochemical company Syngenta. Management of Syngenta are recommending shareholders accept the takeover offer, which, if accepted, would rank as the largest ever overseas transaction by a Chinese company.
The deal comes at a time of significant upheaval within the global agrochemical industry. Syngenta has already fended off three separate takeover bids from its US rival Monsanto, while less than two months ago, Dow Chemicals and DuPont agreed to merge in a $130bn deal.
The motivation behind the takeover offer seems clear, as the deal would transform ChemChina into the world’s largest agrochemical player at a period when the focus on food security in China is intensifying all the time.
The Chinese state owning the world’s largest seed and cropcare business underlines the commitment of Chinese authorities to develop its agriculture sector, as it aims to feed the world’s largest population in the years ahead.
The deal also illustrates the shifting direction of global economic power ever more towards the east. Despite the recent market turmoil and warnings over the economic health of China, the country’s businesses continue to dominate on the global stage.
ChemChina beat off competition from Monsanto to secure this deal with Syngenta and it will come as a major blow to the pride of one of the US’s oldest and most established global heavyweights. Monsanto has craved to buy or merge with Syngenta since it made its first offer of more than $40bn last May.
As ChemChina is a private state-owned entity, Syngenta will be delisted from the stock exchange. However, management of the Chinese giant have hinted that they will explore the option of a future IPO for the Syngenta business and a return to the equity markets in some shape or form in the years to come.
Pending shareholder approval, Syngenta and ChemChina say they expect the deal to be completed by the end of 2016.