China National Chemical Corporation, better known as ChemChina, won European Union antitrust approval today for its $43 billion takeover of Swiss agrochemical company Syngenta AG. The deal is the largest foreign acquisition ever by a Chinese company.
Syngenta shares were trading up 1.5 percent after the EU's antitrust clearance was announced. The Basel-based company designs crop solutions to improve global food security. It offers a range of broad range of products from crop protection to seed treatments to improve crop growth and resilience, produce higher yields, and conserve finite natural resources as well as to protect agricultural land and biodiversity.
This is the latest in a string of deals in the international market for agricultural chemicals, seeds and fertilizers. Last week, the EU approved the $130 billion Dow Chemical and DuPont merger in return for hefty assets sales. Bayer AG is also awaiting approval for its purchase of Monsanto Company.
These deals have narrowed the competition in the market to three key companies and farmers fear the pipeline for new herbicides and pesticides might slow as a result. Despite this, a new market research report has forecast the Seeds, Pesticides, Herbicides, Fertilizers and Agricultural Chemicals Manufacturing Industry to value $59,840 million by 2023.
Similar to last week’s deal, the EU approval for the Syngenta takeover is conditional. ChemChina will sell "a significant part" of its subsidiary Adama's pesticide business, a plant growth regulator business for cereals and a portion of Syngenta’s pesticides along with related assets and personnel.
"In all product markets with problematic overlaps ChemChina will divest either Adama’s or Syngenta’s product," European Competition Commissioner Margrethe Vestager said in the statement. "As a result the commission has approved the transaction."
"It is important for European farmers and ultimately consumers that there will be effective competition in pesticide markets, also after ChemChina's acquisition of Syngenta.”
China’s antitrust authorities are also reviewing the conditions. The companies expect to close the deal by the end of June.
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