Syngenta has approved a $43 billion takeover by the state-owned ChemChina, making it the largest foreign purchase by a Chinese firm, Reuters reports.
The acquisition follows Dow Chemical Co. and DuPont’s merger, which was announced late last year. Monsanto pursued Syngenta throughout 2015 with a final takeover offer of approximately $47 billion, but was unanimously rejected by the Board of Syngenta.
According to Reuters, ChemChina — short for China National Chemical Corp. — made the offer to increase food security for its population.
“This is more than just a company buying another. This is a government attempting to address a real problem,” a source told the news outlet.
Syngenta CEO John Ramsay says the Syngenta’s board will still have to consider any rival offers, but there are tough financial penalty clauses for both companies if the agreement falls through. Ramsay also doesn’t expect any major barriers in terms of regulatory approvals.
In response to the announcement, National Farmers Union (NFU) president Roger Johnson released the following statement:
“Today’s announcement is cause for concern among everyone in U.S. agriculture, especially farmers. NFU will pay particularly close attention to the alarming trend of Chinese government-owned entities purchasing U.S. and other agricultural companies. Most recently, Chinese company Shuanghui International acquired U.S. pork producer Smithfield.
“In this case, Syngenta would be owned by a company controlled by the Chinese government. For an increasingly consolidated sector of agriculture, this is of particular concern since state-owned businesses frequently do not act in economically rational or predictable ways. As a result, more uncertainty often surrounds their businesses, and consequently, other competing businesses may be adversely affected.
“While NFU is pleased that Syngenta will maintain its North American presence for the sake of competition in the marketplace, we will continue to review the impact this deal may have on the competitiveness in U.S. agriculture. NFU is especially concerned that yet another merger will trigger additional domestic consolidation of the remaining seed and crop protection companies.
“We urge the Committee on Foreign Investment in the United States (CFIUS) to review this transaction to the fullest capacity of its jurisdiction for its impact on national security.”
For more details on the acquisition, read the complete Reuters article.
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