ChemChina to acquire Syngenta in $43bn deal

China’s state-owned ChemChina will acquire the Swiss agri business Syngenta in a long-rumoured and controversial $43 billion (€39.4bn) deal.

Secrecy has surrounded the deal since November 2015, when Syngenta – the producer of bioengineered Enogen corn for the ethanol industry – received a $47 billion takeover offer from the US agricultural juggernaut Monsanto.

A Swiss and US tender offer will commence in the coming weeks and the transaction is expected to conclude by the end of the year.

Syngenta’s board said the proposed transaction respects the interests of all stakeholders and is unanimously recommending the offer, which will be ChemChina’s largest foreign purchase.

According to the board there is “committed financing for the deal and a strong commitment to pursue regulatory clearances”.

“In making this offer, ChemChina is recognising the quality and potential of Syngenta’s business. This includes industry-leading R&D and manufacturing and the quality of our people worldwide,” said Syngenta’s chairman Michel Demaré.

Syngenta’s existing management will continue to run the company, and after closing a 10 member board of directors will be chaired by Ren Jianxin, chairman of ChemChina, and will include four of the existing Syngenta board members.

“Syngenta will remain Syngenta and will continue to be headquartered in Switzerland,” said Demaré.

Syngenta hopes the transaction will enable it to expand its presence in emerging markets and notably in China.

If approved, the deal will make ChemChina the world’s largest producer of pesticides and agrochemicals.

‘Absolutely not a China nationalisation’

Earlier in January the ChemChina deal drew criticism from a group of Syngenta shareholders, who were opposing the company’s sale and called for a change in leadership.

Led by Folke Rauscher, the group representing about 10% of Syngenta’s capital accused the board of having worked itself into “a cul-de-sac from which it cannot exit on its own” .

"One can justifiably ask whether the board has really thought through the consequences of nationalising Syngenta through a sale to a state-owned enterprise of a communist country," Rauscher wrote in a letter to the German Basler Zeitung newspaper.

Syngenta’s Demaré was quick to defend the sale after it was announced.

“This is absolutely not a China nationalisation. ChemChina has a fantastic track record of having not only bought companies outside of China but also having kept investing in them and developing them and keeping the culture and values in place and I'm absolutely convinced that the same will happen here,” Demaré told the US CNBC news channel.