ChemChina pounces on Syngenta for cutting edge crop technology
Company agrees to buy Swiss crop seeds and pesticides firm Syngenta for US$43 billion in China’s biggest overseas acquisition
State-owned China National Chemical Corporation (ChemChina) has agreed to buy Swiss crop seeds and pesticides firm Syngenta for US$43 billion, in China’s biggest overseas acquisition to allow the nation to tap advance technology to boost food productivity to feed its increasingly affluent 1.4 billion people.
ChemChina, the nation’s largest chemical company, has obtained unanimous support from Syngenta’s board of directors for it to pay a premium of around 20 per cent for all of Syngenta’s shares, or US$465 each.
“Agriculture is a strategically important sector to China amongst others,” said David Brown, PwC’s transaction services leader in China and Hong Kong. “It is an example of Chinese firms going overseas to seek technologies, industrial processes and brands to bring back to China.”
According to a report by the United States’ Department of Agriculture, US agricultural exports to China has grown exponentially with the latter accounting for around 20 per cent of all US farm exports in 2014.
“China’s agricultural imports reflect its relative scarcity of land resources, and its most prominent imports are oilseeds, oils, and cotton - products that have high land requirements per unit of output,” the USDA said in a report.
Agricultural experts believe the purchase of Syngenta would help China in securing technology for genetically modified (GMO) seeds that are becoming increasingly vital in expanding production of major oilseeds such as soybeans, corn and cotton.
In its first directive of the year, traditionally an agricultural policy, the State Council for the first time said GMO crops should be “cautiously promoted” on the basis that public safety is ensured.
