Published Date : Mar 01, 2016
Last month, China National Chemical, better known as ChemChina, surprised the industry with its announcement of acquiring the Switzerland-based agrochemical manufacturer Syngenta. The agrochemical and seeds market has been traditionally dominated by the U.S. and European manufacturers. The acquisition deal worth US$43 bn is the largest-ever deal by a Chinese government-owned company. By purchasing Syngenta, ChemChina has now access to the advanced gene modification and agro-chemical technology. According to ChemChina Chairman Rin Jianxin, the company aims to promote the integrated solutions of Syngenta in China where farmers are more reliant on traditional farming methods.
Why Syngenta Accepted ChemChina’s Offer?
In the agrochemical industry, Syngenta is the largest player across the globe, followed by Germany-based Bayer. The Swiss company owns the rights to various seed varieties, especially genetically modified varieties. To finance further business expansion, including research and development programs, Syngenta accepted the acquisition offer from ChemChina. The company is focussing on research and development to deal with soil and water pollution and stringent rules on biodiversity. The spread of free trade agreements has led to agricultural markets opening up. The larger companies are taking this advantage to expand their business and meet regulations on food safety.
How ChemChina’s Acquisition Will Help China in Achieving Food Security?
ChemChina has made a number of acquisitions since 2011. It bought Israel’s ADAMA, the largest generic agrochemicals manufacturer, followed by Pirelli, the Italian tire manufacturer. With acquiring Syngenta, the sales of agrochemicals and seeds at ChemChina will reach the US$18 bn level. To meet the ever-increasing demand for food, China needs to make its farms more efficient with the help of advanced agrochemical and seed technologies. ChemChina’s acquisition of Syngenta is expected to offer solutions in achieving food security in China.