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Brazil approved ChemChina/Syngenta deal
Apr. 24, 2017
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While North American and European authorities see a necessity of asset sales to allow the merger of Syngenta with ChemChina, in the Brazilian market the two companies have a free path to consolidate their operations. The acquisition of the Swedish company by the Chinese conglomerate was approved ‘without restrictions’ by the Administrative Council for Economic Defense (Cade).
The general superintendency of the agency that defends competition granted allowance for the operation on 24th, February this year. In its legal open, Cade recommended the approval without restriction and recognized that both companies have a superposition in several markets. However, it considers that there is sufficient competition to avoid "exercising market power".
“While the entrance in these markets has an untimely character, mostly for inherent issues at the regulatory deal, the competition worries can be ruled out by the criteria of rivalry. Competition worries were not identified by the vertical relations or strengthened,” reads Cade’s legal opinion.
According to Cade’s data, the procedure started in September of 2016. The publication of the order that confirms the decision was done at the Union’s Official Gazette at the first day of March of this year. The publication of the decision was restricted to the history of the procedure of Cade’s website and the Official Union Gazette without specific communication on the part of both companies.
For Syngenta, Brazil is the main market in Latin American and one of the most important markets at the global level. According to the annual balance referred to 2016, Brazil represents 67% of the sales of the company in the Latin American continent, which was US$ 3.293 billion in the last year.
The subsidiary of ChemChina in Brazil is Adama Agricultural Solutions, a multinational from Israel. The company was founded in 1945 with the group Makhteshin Agan, which is headquartered in Tel Aviv. The Brazilian operation represents 15% of the total business of the company, the largest industrial unit outside of Israel. They have two factories, one in Londrina (state of Paraná) and other in Taquari (state of Rio Grande do Sul).
According to European authorities, the proposal was to sell part of Adama’s plant growth regulator business for cereals – which belongs to ChemChina since 2011 – besides the products that are yet under development. Syngenta will sell its businesses for fungicides for vegetables and herbicides for cereals, vegetables and sunflower.
Even though they are multinationals, the two companies discard the possibility, at least for now, of limitations imposed in other continents that would interfere in the line of products sold in Brazil. Syngenta explains that its portfolio of products is regional. This way, the products commercialized in different regions are adapted to the conditions of each market.
Adama also informed that the decision related to the acquisition until the moment should have no impact on the Brazilian operation. “Adama is supporting ChemChina in completing the acquisition of Syngenta regarding the approval of antitrust authorities,” reads the statement.
Source: AgroNews
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