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ChemChina takeover poses no foods safety issues: Syngenta AG
Mar. 28, 2016
Syngenta AG
SwitzerlandFollow
SwitzerlandOn last Friday, Syngenta AG said that its planned acquisition by China National Chemical Corp. commonly known as ChemChina carries no food safety or “substantial national security issues.” The statement came after several US lawmakers raised concerns over the seed maker’s takeover by the Chinese state-owned company.
According to a report, four senators Joni Ernst (R., Iowa), Chuck Grassley (R., Iowa), Sherrod Brown (D., Ohio), Debbie Stabenow (D., Mich.), on behalf of farm states sent a memo to the US Treasury department requesting that the Committee on Foreign Investment in the US (CFIUS), led by the US Treasury, should look into the acquisition’s potential negative impact on the country’s food system. According to the US lawmakers, increased overseas control over major parts of the US food production is a potential threat to the country’s domestic food security.
In the letter to the US Treasury Department, they said: “It is not unreasonable to suggest that shifts in company governance; operational strategy; or financial health—particularly in light of the magnitude of this leveraged transaction—could have consequences for food security, food safety, biosecurity, and the highly competitive U.S. farm sector as a whole.”
They further warned that there will be greater risk in future if important US agriculture assets are given under foreign government control, and especially to China who is a direct threat to the US.
However, Syngenta thinks differently. According to the company’s representative, there are no security issues and even if the US government wants to review the deal, the company welcomes it with warm heart. He indicated that Syngenta will continue to closely work with the government and all other regulatory agencies as the deal review process goes forward. ChemChina is expected to complete the takeover by the end of this year.
As the deal nears completion, the US opposition to the biggest ever acquisition by a Chinese company is increasing, with many senior farm state senator rating the $43 billion takeover by ChemChina a threat to the US national food security. The Switzerland-based seed giant, produces nearly one-fourth of its sales in North America, where the company operates as a top most pesticide seller. It also supplies nearly 10% of US soybean seeds and around 6% of corn seeds, according to an estimate by Morgan Stanley.
Analysts have said before that the deal could transform China’s bio-tech industry. In addition, it will also assist in China’s attempt to modernize its own agriculture industry; to cater the increasing demand of its more rich and urban population.
The Swiss-based seed maker also highlighted that the deal would prove to be beneficial for farmers, as Syngenta will retain its investment in preparing a higher quality performing seeds, better pesticides, and new crop genes. This will also help in improving the overall agriculture industry, which currently is under a steep decline forcing companies to lay off workers and reduce investment in research and development.
The Chinese takeover of the technological companies operating in the US facing regulatory issues is becoming a routine. The US government is keen to ensure that the acquisition doesn’t hurt the country’s national interest and poses no threat to national security. The trade war between China and the US is a prolonged one, and as the things stands, the takeover of the Swiss seed maker by ChemChina still revolves around uncertainties, as any products released in the US needs to pass the US regulatory tests.
Source: China Business News
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