Agrochemical deal faces new delay

Chinese company's $43 billion purchase approved by the US, but EU, Beijing seek more information from Swiss side

Uncertainty continues to cloud state-owned China National Chemical Corp's $43 billion deal to buy Syngenta AG, the Swiss agrochemical and seed producer, as regulators in Europe have yet to approve the proposed deal.

Syngenta announced in its third-quarter earnings statement on Oct 25 that the deal is expected to be pushed back to the first quarter of 2017 because "regulators in the European Union and elsewhere have recently requested a large amount of additional information".

Syngenta and ChemChina remain fully committed to the deal and are confident it will close.

"This move shows Syngenta is still seeking more time to prepare materials and evidence to show that the purchase doesn't raise antitrust issues," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

The European Union had been expected to announce its decision on the deal by Oct 28. But that deadline appears likely to be extended by several months, given Syngenta's statement on Oct 25.

ChemChina announced in February that it had agreed to purchase Syngenta, which has global operations, including some in the United States.

In August, the Committee on Foreign Investment in the US approved the deal. But regulatory reviews by the European Union and China's Ministry of Commerce are pending.

Through the proposed deal, ChemChina would have become the world's largest supplier of pesticides and other crop-care chemicals. But Dow Chemical Co's merger with DuPont and Bayer AG's possible purchase of Monsanto will likely reorder the rankings.

The top six suppliers are vying for market share and financial resources to push research and development of new products.

Ding says the ChemChina-Syngenta deal entails a big investment - a necessary one because China's pesticide industry is riddled with low profitability, and only global scale can improve that.

Xu Hongcai, a researcher at the China Center for International Economic Exchanges, says that because legislative bodies in Australia and Germany have recently asked whether China's rising investment in their high-tech sectors would hurt their economies, it is necessary for ChemChina and Syngenta to carry out every procedure carefully to complete their deal.

zhongnan@chinadaily.com.cn

(China Daily Africa Weekly 10/28/2016 page28)