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Chinese firm to buy Swiss giant Syngenta

Beijing - State-owned China National Chemical on Wednesday offered $43bn in an agreed takeover for Swiss pesticide and seed giant Syngenta, in what would be by far the biggest-ever overseas acquisition by a Chinese firm.

The deal is the latest in a string of overseas investments for China's biggest chemical company, also known as ChemChina, as Beijing prods its companies to "go out" to expand.

Syngenta's board recommended the offer of $465 a share, plus a special dividend, to its shareholders, saying in a statement that "the proposed transaction respects the interests of all stakeholders".

Political pressure

The statement said the deal "will enable further expansion of Syngenta's presence in emerging markets and notably in China".

But it could face challenges before going through.

The Swiss company reportedly rejected a higher $47bn bid from rival Monsanto in August last year and the US agribusiness giant could come back with a counter-offer.

The transaction is also likely to face regulatory hurdles - much of Syngenta's business is in the US, where a $18.5bn offer by Chinese state-owned energy company CNOOC for American rival Unocal failed in 2005 in the face of political pressure.

An analyst at Germany's Baader Bank said prior to the announcement that a deal would be welcomed by investors given the size, however, "it could pose political problems."

The offer far outstrips China's biggest overseas acquisition to date, CNOOC's purchase of Canada's Nexen for $15.1bn in 2013.

It is also bigger than China Unicom Hong Kong's purchase of China Netcom Group for $28bn in 2008, according to data from Bloomberg.

Energy and commodities

The Chinese government has encouraged its companies to invest abroad to secure raw materials and markets, while growth is slowing at home.

The deal is the latest in a string of acquisitions by ChemChina, which last month bought a 12% stake in Swiss energy and commodities trader Mercuria to expand its portfolio.

Also in January, the Chinese company said it planned to buy Germany's KraussMaffei Group, which makes machinery for producing plastics and rubber, for about $1.01bn. 


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