ChemChina announced on Wednesday, Feb. 3, that it has reached a deal to acquire Syngenta, a Swiss seeds and pesticide group, for over $43 billion. However, there are concerns on whether the agreement will pass regulatory review.
According to the announcement on ChemChina's website, the two companies have reached an agreement whereby Syngenta board of directors recommended the offer to shareholders.
The deal is $465 per share in addition to a special dividend of $4.92 per share to be paid to Syngenta shareholders, reported the Global Times. The deal is at premium of approximately 20 percent to Syngenta's Feb. 2 close of 392.30 Swiss francs.
The acquisition is the biggest overseas takeover by a Chinese firm, beating the deal of $15.1 billion held by China National Offshore Oil Corp. after it acquired Canada's Nexen.
The statement revealed that the headquarters of Syngenta would remain in Basel, Switzerland, and the existing management will continue to run the company. While neither of the companies commented during the press conference, Syngenta may be relisted in the future.
A research fellow at Morning Whistle Group, Wang Yumin, told the publication, "It seems kind of routine for ChemChina to relist its overseas assets."
However, the statement revealed that the agreement should pass antitrust reviews and get endorsement from regulatory bodies in relevant jurisdictions, implying that the deal may face latent risks from regulatory scrutiny.
ChemChina may not have problems when it comes to passing antitrust reviews due to its limited market share in agribusiness, but it is still unclear whether it will get all the necessary approvals.
For instance, U.S. regulators barred Philip's sale of Lumileds to a consortium under Chinese investment fund Go Scale Capital. On the other hand, the Dutch electronics giant said that the $3.3 billion deal did not go through because of opposition from the Committee on Foreign Investment in the United States (CFIUS).
With Chinese firms' interest in overseas investments increasing lately, some are in dilemma whether the decision represents restrictions on China's cross-border M&A deals by the U.S. government.