Syngenta, the world’s largest agrichemicals company, rejected a $42 billion takeover offer from state-owned China National Chemical Corporation. ChemChina offered 449 Swiss francs per share, or 41.7 billion Swiss francs ($41.72 billion). It is said the offer was rejected due to regulatory concerns by Syngenta’s management, but talks between the two companies have not ended, and an agreement with ChemChina could still be made within the next few weeks. The Switzerland-based Syngenta is also in talks with other potential companies to takeover.
When asked, a ChemChina spokeswoman said the company had nothing to announce. Syngenta has also declined to make any comments about rejecting the offer from ChemChina.
Syngenta turned down a $47 billion takeover from Monsanto earlier this year.They stated the reason for declining the bid was that it undervalued the company. Shareholders were not happy about this decision, and they started putting pressure on Syngenta. In order to appease the shareholders, Syngenta has decided it will buyback $2 billion in shares and sell their vegetable seed business. Syngenta’s chief executive, Mike Mack, stepped down two months after they declined Monsanto’s offer, due to the pressure from the shareholders.
The proposed deal from Monsanto was the same as the offer from ChemChina, but they wanted to pay 55 percent of the offer in shares of the combined group. In August, Monsanto abandoned the revised cash plus stock proposal deal that was worth 470 Swiss francs per share. The value declined when Monsanto’s stock price fell in August due to a slump in global commodities. The bid then went to 433 francs per share.
Syngenta’s Swiss-listed shares opened more than 11 percent higher on Friday, and they were trading up 7.2 percent at 370.90 Swiss francs upon news of the takeover approach.
ChemChina is looking to expand internationally, and acquiring Syngenta would further their expansion ambitions and enhance China’s technological know-how. As China’s economy has increased in recent years, they have been looking overseas for more business. “Syngenta has sales channels in over 120 countries, and it is a world leader in research and pesticide sales volume. Only [a] state-owned firm is able to make such [an] offer,” said Duan Yousheng, an analyst with the China Pesticides Industry Association.
ChemChina already has a 5 percent share in Syngenta through ownership of Israeli generic pesticides maker Adama. ChemChina has also acquired companies like Norwegian silicon business Elkem, French feed additives maker Adisseo, Australian plastics maker Qenos, and Italian tire maker Pirelli. The most recent acquisition of Pirelli shows the appetite for European firms by Chinese companies, and ChemChina is known for their interest in Western specialty chemical businesses.
There are some shareholders that have scolded the Swiss group’s management for being so defensive. This has made shareholders question if the company can improve its financial fortunes, as demand for agricultural commodities remains weak. “Future demands for pesticides globally will stay strong, particularly for a country like China, which is trying to boost grains production,” said Duan Yousheng, an analyst with the China Pesticides Industry Association.
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