The $43 Billion Mega-Deal | ChemChina’s Merger with Swiss Giant Given Approval
A $43 billion mega-merger between China National Chemical Corp. (ChemChina) and Syngenta AG looks set to reshape the global agrochemicals industry.
First proposed in 2016, the transaction is the largest proposed foreign takeover by a Chinese company in history, and would make China National Chemical Corp. the world’s largest supplier of crop protection products.
The takeover has now won US and European Union Antitrust approval for the takeover, on a number of conditional requirements. The EU stated “In all product markets with problematic overlaps ChemChina will divest either Adama’s or Sygenta’s product”, along with related assets and personnel. The approval from the U.S. Federal Trade Commission requires the companies to further divest three types of pesticides in the U.S.
This deal is just one of three potential farm mega-mergers being floated, which, if approved, will concentrate global agricultural power in the U.S, Germany and China. Questions have been raised over the global benefits and implications of the mergers to consumers, farmers, sector stability and market competition. These two further deals are currently under review by regulators.
For China, the merger is a chance to ensure and develop food security in the region. The country has seen a rapid population growth over the last 50 years, with current populace figures around 1.37 billion. Years of intensive farming on limited land area, has degraded growing conditions and soil health, leaving China vulnerable to crop shortages. The country therefore relies heavily on food imports, and is currently the seventh largest importer of corn, as well as a major soybean importer, on the global market.
This merger is the opportunity to acquire valuable seed and agrochemical technology, which will help the country use the land it has available for growing, more efficiently and productively. The Chinese government hope this will alleviate current supply pressures the country is facing, and help develop a more robust and adaptable national agricultural sector.
This deal is just one of three potential farm mega-mergers being floated, which, if approved, will concentrate global agricultural power in the U.S, Germany and China ”
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