Syngenta AG said Wednesday that its board is recommending shareholders accept the offer from China National Chemical Corp., also known as ChemChina.
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“In making this offer, ChemChina is recognizing the quality and potential of Syngenta’s business”, said Michel Demare, Syngenta’s chairman, in a statement announcing the deal.
State-owned ChemChina is highly acquisitive and has bought or taken a significant stake in nine European industrial companies in recent years, including agrochemical manufacturer Adama (formerly Makhteshim Agan).
Last month, ChemChina said it would buy Germany’s KraussMaffei Group, which makes machinery for producing plastics and rubber, for €925 million ($1 billion).
The deal comes on the heels of an offer Syngenta turned down last August, when Monsanto offered to buy it for $47 billion.
In 2015 U.S. agricultural company Monsanto, which is a shade larger than Syngenta on a revenue basis, mounted a takeover bid for the Swiss company. The company reported Wednesday that net income for 2015 fell 17 percent to $1.3 billion as it struggled with low crop prices, instability in emerging markets and currency fluctuations.
The deal would be the biggest foreign purchase by a Chinese company.
“I think the overall regulatory approvals will not be very challenging”, CEO John Ramsay told Reuters in an interview, adding that ChemChina had secure financing in place for the $43 billion transaction. The offer is equivalent to a Swiss franc value of CHF 480 per share. The transaction is expected to conclude at year’s end.
“We have a very attractive offer on the table and we are putting it to our shareholders”, Syngenta’s interim Chief Executive John Ramsay said in an interview with The Wall Street Journal. After closing, a ten member Board of Directors will be chaired by Ren Jianxin, Chairman of ChemChina, and will include four of the existing Syngenta Board members. It will also support the ambitions of China’s president, Xi Jinping, to increase output and keep China self sufficient in food production as its growing middle class eats more meat and farmland is turned into housing and golf courses.
China is now the world’s fastest developing market for agricultural chemicals as it is seeking to boost farming productivity and cut reliance on food imports.
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The realignment of the global chemical industry has been accelerating since USA powerhouses Dow Chemical and DuPont announced a megamerger late previous year.
