Published Date : Nov 13, 2015
Syngenta AG, the largest agrichemicals company across the globe, has rejected a takeover offer worth US$42 billion by the China National Chemical Corp. The takeover rejection has lifted Syngenta’s share value. The company has been under pressure to increase shareholder returns since it rejected Monsanto’s US$47 bn takeover bid. Its chief executive resigned post the rejection of the takeover bid. According to the reports, the Swiss-based company was in talks with China National Chemical Corp. as well as others for a potential deal. However, sources close to the matter have revealed that Syngenta turned down the offer owing to regulatory concerns.
Both ChemChina and Syngenta have declined to comment. ChemChina holds 5% share of the global crop chemicals as the state-hold company owns Adama, the Israeli manufacturer of generic pesticides. Acquiring Syngenta’s 19% market share would have made ChemChina as the industry leader. Industry experts have pointed out that taking over Syngenta would have also helped ChemChina to expand its presence across the globe as well as enhance its technological skills. ChemChina has a history of acquiring stakes at western speciality chemicals companies. It has recently acquired Italian tire manufacturer Pirelli.
According to reports, ChemChina’s initial bid was 41.7 bn Swiss francs that amount to US$41.72 bn. Interestingly Monsanto had also offered the same price. However, Monsanto wanted to pay 55% of the bid amount in shares of the combined group. As Monsanto’s share price fell in August, the value of the bid declined. Shareholders of Syngenta have blamed the company’s management for its defensive stance and have raised eyebrows over its ability to improve its balance sheet amid weak demand for agricultural commodities. The Swiss-based company announced in September that it would buy back stock worth US$2 bn and above by selling off its vegetable seeds vertical.