ChemChina said to improve Syngenta bid in two-stage takeover

Date:12-21-2015

China National Chemical Corp. improved its offer to buy Syngenta AG, proposing a complex two-stage takeover that would mark the biggest-ever acquisition by a Chinese company, people with knowledge of the matter said.

ChemChina, as the state-owned company is known, offered to purchase 70 percent of Syngenta now, with an option to acquire the remaining 30 percent of the company at a later date, said the people, who asked not to be identified because the information is private. Basel-based Syngenta, the world’s largest pesticide maker, will hold a board meeting before the end of the year to vote on the deal, the people said. While talks are advanced, no agreement has been reached and there’s no guarantee a deal will be completed.

The architecture of the proposal would allow ChemChina to work with Syngenta to integrate the two businesses before assuming complete control of the Swiss company, the people said. During the discussions, ChemChina proposed a number of similarly structured deals, whereby it would acquire Syngenta in two stages. Syngenta’s American depositary receipts jumped as much as 8.1 percent in after-hours trading Friday.

ChemChina offered about 470 Swiss francs ($472) a share for 70 percent of Syngenta, one of the people said. At that price, the company would have a market value of about $44 billion. ChemChina revised the proposal after its previous cash offer of 449 francs a share was deemed too low. Syngenta’s shares closed at 374.5 francs last Friday.

Industry Consolidation

Pressure is growing for Syngenta to do a deal in the aftermath of an agreement between Dow Chemical Co. and DuPont Co. to merge, creating a company with a market value of more than $100 billion and the world’s largest agriculture business. That deal may trigger a wave of consolidation in the industry as competitors dash to reposition themselves.

ChemChina Chairman Ren Jianxin met with Syngenta in Europe last week, people familiar with the matter said Tuesday, to discuss a revised proposal.

Spokesmen for Syngenta and ChemChina didn’t immediately respond to requests for comment on the raised offer.

Syngenta is also holding informal talks about a combination with U.S. peer Monsanto Co., almost four months after rebuffing the company’s $46.6 billion takeover proposal, people familiar with that situation have said. Monsanto is discussing internally the merits of a new offer, as well as opportunities to acquire crop-chemical assets from other companies, Chief Operating Officer Brett Begemann told reporters last month.