China National Chemical Corp has agreed to buy Swiss pesticide and seeds maker Syngenta for more than $43 billion (€39 billion) in cash as the state-backed company extends its shopping spree with what would be the biggest acquisition by a Chinese firm.
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Syngenta shareholders will get paid as much as 16 Swiss francs per share by ChemChina, and this is apart from a special dividend of 5 francs on closing.
The companies also said that a future public offering could be in the pipeline but did not divulge further details.
John Ramsay, CEO of Syngenta expressed joy at the bid which he said is “very appropriate and attractive”, adding that ChemChina has a solid financial backing and that there won’t be any problems to thwart the deal.
A year ago it announced the takeover of Italian tyre maker Pirelli, renowned for its Formula One equipment and racy calendars, in a deal valued at 7.4 billion euros.
The deal accelerates a shakeup in the global agrochemicals industry and is a setback for USA seed company Monsanto, which made an unsuccessful $45 billion move for Syngenta past year. The Chinese government has encouraged its companies to invest overseas to secure raw materials.
Last month, ChemChina bought German machinery maker KraussMaffei and took a 12-percent stake in Swiss energy trader Mercuria. According to Demaré, Syngenta will remain Syngenta and will continue to be headquartered in Switzerland. BlueStar grew through mergers and acquisitions, before joining with companies under the chemical ministry.
ChemChina’s pursuit of Syngenta is driven partly by national interests, as President Xi Jinping attempts to boost the country’s agricultural output to maintain self-sufficiency in the wake of China’s rapidly growing middle class. Syngenta AG stock has decreased from $81.37 per share on the close of August 24 – shortly before the Monsanto talks collapsed – to a September 25 close of $62.95 per share.
Syngenta agreed to the takeover bid after spurning a $46.5 billion offer from agricultural giant Monsanto.
It is the biggest acquisition deal by a Chinese company in the global market.
“We think it’s a very good deal for Syngenta and all the stakeholders will benefit from this transaction”, Syngenta Chairman Michael Demaré said in a video posted on the company’s website. Separately, the company reported weak profit and sales for its fiscal 2015 reflecting poor performance in all regions, except North America.
“Syngenta is the world leader in crop protection having significantly increased its global market share over the last ten years”, said John Ramsay, chief executive officer, in a release.
Meanwhile, a new board of directors would be formed with Ren Jianxin the chairman.
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Dyalco, J.P. Morgan, Goldman Sachs and UBS advised Syngenta on the transaction.
