ChemChina is one step closer to acquire Swiss agrochemicals Syngenta

By Staff Writer

Jan 18, 2016 06:20 AM EST

Swiss agrochemicals maker Syngenta has been considering a possible merger in the recent months, and it's reported that now the company already leaned toward one favored candidate. China National Chemical Corp., also known as ChemChina is said to move one step forward to acquiring the company.

Previously last month, Syngenta chairman Michel Demaré said to Reuters that they are still looking at different combinations. Besides ChemChina, other companies also have eyes on Syngenta, including American multinational agrochemical and agricultural corporation Monsanto. "I have said a few months ago that I believe within six months we will see some consolidation steps. It is too early to say how all this will finish," Demaré stated when asked about the prospect of his company becoming a Chinese-owned.

However, an unnamed source told Bloomberg that Syngenta's board had met this week in private discussions and it's highly possible that ChemChina would advance to take over the company. It's reported that their approval could open the way for a formal agreement.

To acquire Syngenta, ChemChina already offered 470 Swiss francs a share in cash for the company. In total, it would give the company a value worth about 44 billion francs ($43.8 billion). ChemChina, being advised by HSBC, is seeking a loan from Western banks to fund the potential takeover deal. 

This move would bring a positive impact on Chinese government's goal to increase farming productivity across the country. The need to boost farming productivity in China comes from the fact that the country has limited farm land and so far has been relying on food imports.

Recently, ChemChina bought German plastics and rubber manufacturer KraussMaffei Group. The transaction is reported to worth about $1 billion, according to New York Times. It is often regarded as one of the most intriguing Chinese foreign purchase done recently. ChemChina also bought 26 percent of Italian tire maker Pirelli's stake on March last year.

According to The Economist, it's a growing trend for Chinese companies to invest overseas. Last year, companies from mainland China close a total worth $61 billion overseas deal, and it's predicted to increase even more this year, amid the weakening of China economic growth. 

Recent changes and improvement have been working for ChemChina. The company is now emerging as one of the largest chemical companies in China, and also as the most dynamic global enterprise compared to other China companies. If the deal is closed, this would be the biggest purchase ever made by a Chinese company. 

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