China National Chemical Corp. agreed to buy Swiss pesticide and seeds maker Syngenta AG for more than $43 billion in cash in 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 equivalent to 480 Swiss francs, which is about 20 percent higher than the stock’s last close.
There will also be a special dividend of 5 Swiss francs per share to be paid if the deal closes. Syngenta shareholders will in addition receive the proposed ordinary dividend of CHF 11 in May 2016. It is planned to make a facility available for the conversion of U.S. dollar sales proceeds into Swiss francs on closing.
Syngenta's board of directors has unanimously recommended the offer to its shareholders. There is committed financing for the deal and a strong commitment to pursue regulatory clearances. A Swiss and U.S. tender offer will commence in the coming weeks and the transaction is expected to conclude by the end of the year.
Syngenta’s existing management will continue to run the company. After closing, a 10-member board of directors will be chaired by Ren Jianxin, chairman of ChemChina, and will include four of the existing Syngenta Board members. ChemChina is committed to maintaining the highest governance standards with a view to an IPO of the business in the years to come.
"In making this offer, ChemChina is recognizing the quality and potential of Syngenta’s business," said Michel Demaré, chairman of Syngenta. "This includes industry-leading R&D and manufacturing and the quality of our people worldwide. The transaction minimizes operational disruption; it is focused on growth globally, specifically in China and other emerging markets, and enables long-term investment in innovation. Syngenta will remain Syngenta and will continue to be headquartered in Switzerland, reflecting this country’s attractiveness as a corporate location."
Ren Jianxin, chairman of ChemChina, said the discussions between the two companies have been friendly, constructive and cooperative.
"We will continue to work alongside the management and employees of Syngenta to maintain the company’s leading competitive edge in the global agricultural technology field," Jianxin said. "Our vision is not confined to our mutual interests, but will also respond to and maximize the interests of farmers and consumers around the world. We look forward to Michel Demaré remaining on the Board as vice chairman and lead independent director, and to working with John Ramsay and the management and employees of Syngenta to deliver safe and reliable solutions for the continued growth in global food demand."
The transaction will enable further expansion of Syngenta’s presence in emerging markets and notably in China.
"This deal will enable us to maintain and expand this position, while at the same time significantly increasing the potential for our seeds business," Syngenta CEO John Ramsay said. "It will ensure continuing choice for growers and ongoing R&D investment across technology platforms and across crops. Our commitment to cost and capital efficiency will remain unchanged."
For more information on what the transaction means for Syngenta click here.
