14 of February 2016 21:45:15
State company to become largest pesticide supplier BY JONATHAN BROWNING, RUTH DAVID AND DINESH NAIR Bloomberg China National Chemical Corp. is nearing an agreement to buy Swiss pesticide-and-seeds-maker Syngenta for about 43.7 billion francs ($42.8 billion) as the state-backed company extends its buying spree with what would be the biggest-ever acquisition by a Chinese firm, said people familiar with the matter. ChemChina, as the state-owned company is known, offered about 470 francs a share in cash and a deal could be announced as early as Wednesday when the Swiss company reports earnings, the people said, asking not to be named as the details aren’t public. That’s 24 percent higher than Syngenta’s last close of 378.40 francs on Feb. 1. Its shares rose 5 percent to 397.3 francs as of 3:36 p.m. in Zurich. 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 cropcare technology that can boost agricultural output and help feed the world’s biggest population. A spokesman for ChemChina declined to comment, as did officials at Syngenta. Final talks are ongoing and could still fall apart or be delayed, the people said. At $43 billion, a successful purchase would be the largest acquisition by a Chinese firm, surpassing China Unicom Hong Kong Ltd.’s $29 billion purchase of China Netcom Group Corp. in 2008, according to data. Analysts expect Syngenta to report an 11 percent decline in annual sales to $13.5 billion Wednesday. The company in 2014 generated 75 percent of its revenue from crop protection such as pesticides, followed by its seed business, markets that would help ChemChina reduce its reliance on petrochemical and petroleum products, which accounted for almost half of its 256.4 billion yuan ($39 billion) in 2014 revenue. 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 grainintensive meat and farmland is converted to housing and golf courses. The World Bank estimates that China’s arable land declined 6 percent 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 U.K. Helping execute that vision is Ren, a 58-year-old executive who started China’s first professional cleaning company with a 10,000 yuan loan and is now emerging as one of the country’s most active dealmakers. Syngenta would trump all past deals in a country whose appetite for foreign assets is surging. ChemChina’s latest purchase follows other Chinese outbound deals this year including Haier Group Corp.’s $5.4 billion purchase of General Electric’s homeappliance business to Dalian Wanda Group’s deal to buy control of Legendary Entertainment. This year’s tally is on pace to exceed 2015’s record $123.9 billion, according to data. In 2016 alone, ChemChina, whose holdings include tiremaker Pirelli, led a group that agreed to buy German machinery maker KraussMaffei Group for €925 million ($1 billion) and it acquired 12 percent of Swiss commodity trader Mercuria Energy Group. Prior to that, purchases have included Adisseo Group in France to Australia’s Qenos Holdings and Norway’s Elkem. The company has announced more than $15 billion of deals in the past decade, excluding Syngenta, according data.