China’s state-owned ChemChina is nearing a deal to buy Swiss seeds and pesticides group Syngenta for around 43 billion Swiss francs ($42.2 billion), two people familiar with the matter said on Tuesday. That’s 24 percent higher than Syngenta’s last close of 378.40 francs on February 1.
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The Swiss-based company on Wednesday said that its board of directors had chose to unanimously recommend that shareholders accept ChemChina’s cash offer of $465 per share plus a closing bonus equivalent to $15 per share. Equity investors have also expressed an interest, the Chinese national said, declining to provide names or give more detail.
Syngenta is expected to report revenues of $13.5 billion in their earnings report, an 11% decline from a year ago, and 75% of those earnings come from its seed and crop segments.
Syngenta reportedly rejected a higher $47bn bid from rival Monsanto in August previous year, and in November Bloomberg News said the United States firm was mulling a higher offer. It also underlines the credentials of chairman Ren Jianxin as a major dealmaker who has fervently acted upon Beijing’s exhortations for its companies to go overseas, build market share, and gain technological expertise. Furthermore, it would allow China to spur agricultural development, as it looks to feed the world’s largest population, with commercial development reducing the amount of farmland available.
Similarly, ChemChina said in its press release that it is “fully supportive of Syngenta’s intactness in its operations, management and employees, including keeping its headquarters in Basel, Switzerland”. Demare will be the as vice chairman of Syngenta’s board and a lead independent director when the acquisition is completed, according to the statement.
ChemChina’s advance on Syngenta leaves Monsanto in a thorny spot.
DuPont and Dow Chemical Co agreed in December to combine in an all-stock merger valued at $130 billion in a first step towards breaking up into three separate businesses, a move that was seen as a trigger for further consolidation.
Last month, ChemChina bought German machinery maker KraussMaffei and took a 12-percent stake in Swiss energy trader Mercuria.
“Our vision for Syngenta is all about growth”, ChemChina Chairman Ren Jianxin said in a video posted online.
Just one month into 2016, Chinese companies have announced plans to buy 66 foreign companies worth $68 billion.
Chinese companies have been involved in a flurry of global acquisitions since the start of this year.
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Dyalco, JP Morgan, Goldman Sachs and UBS served as financial advisors to Syngenta on the transaction, with Bar & Karrer and Davis Polk as legal advisors.
