World Economy

ChemChina Offers $43b for Syngenta

ChemChina Offers $43b for SyngentaChemChina Offers $43b for Syngenta

China National Chemical Corp. agreed to buy Swiss pesticide and seeds maker Syngenta AG for more than $43 billion in cash as the state-backed company extends its shopping spree with what would be the biggest acquisition by a Chinese firm.

ChemChina, as the closely held company is known, offered $465 a share in cash, according to a statement on Wednesday. The offer, endorsed by Syngenta’s board, is about 20% higher than the stock’s last close of 392.30 Swiss francs ($385) on Tuesday.

If completed, the deal would help Chairman Ren Jianxin transform ChemChina into the world’s biggest supplier of pesticides and agrochemicals, while snatching an asset coveted by St. Louis-based Monsanto Co. It also underscores the importance China attaches to owning seed and crop-care technology that can boost agricultural output and help feed the world’s biggest population.

In addition, the deal is expected to close by the end of the year. A special dividend of 5 Swiss francs a share will be paid if the deal closes.

Syngenta had sales of $13.4 billion in 2015, mainly from crop protection such as pesticides and the seeds business. Bolstering agrochemicals would help ChemChina reduce its reliance on petrochemical and petroleum products, which accounted for almost half of the 256.4 billion yuan ($39 billion) in revenue it had in 2014, the latest annual figures available for the company.

Behind the Chinese company’s pursuit are national interests. Chinese President Xi Jinping is trying to boost agricultural output to maintain self-sufficiency as a growing middle class consumes more grain-intensive meat and farmland is converted to housing and golf courses. The World Bank estimates that China’s arable land declined 6% in the last decade as economic growth boomed.

As well as domination of the Chinese market, Syngenta will provide global access to farmers from Brazil to the UK.