EU clears ChemChina’s $43bn Syngenta takeover

The European Commission has approved the proposed $43 billion takeover of Swiss pesticide maker Syngenta AG by ChemChina — the largest foreign acquisition by a Chinese company.

“The approval is conditional on the divestiture of significant parts of ChemChina’s European pesticide and plant growth regulator business,” said the EC.

Commissioner Margrethe Vestager, in charge of competition policy, said: “It is important for European farmers and ultimately consumers that there will be effective competition in pesticide markets, also after ChemChina’s acquisition of Syngenta.

“ChemChina has offered significant remedies, which fully address our competition concerns.

“This has allowed us to approve the transaction.”

The EC said ChemChina is currently active in pesticide markets in Europe through Adama, its wholly-owned Israel-based subsidiary.

“Unlike Syngenta, which produces pesticides based on active ingredients it has developed itself, Adama only produces generic pesticides based on active ingredients developed by third parties for which the patent has expired,” said the Commission.

“It is the world’s biggest producer of such generic pesticides.”

The Commission said it had concerns that the transaction as notified would have reduced competition in a number of existing markets for pesticides, and had concerns the transaction would reduce competition for plant growth regulators.

“ChemChina offered a set of commitments, which address the Commission’s competition concerns in full,” said the EC.

ChemChina will divest:

  • a significant part of Adama’s existing pesticide business, notably fungicides for cereals, fruits and oilseed rape, herbicides for cereals, corn, sunflower and vegetables, insecticides for cereals, corn, fruits, oilseed rape, and vegetables and its seed treatment products for cereals and sugar beet
  • some of Syngenta’s pesticides, notably fungicides for vegetables and herbicides for cereals, vegetables and sunflower
  • 29 of Adama’s generic pesticides under development and access to third parties to studies and field trial results for these products
  • a significant part of Adama’s plant growth regulator business for cereals
  • all relevant intangible assets underpinning the divested pesticide and plant growth regulator products.

“The Commission concluded that the divestment package will ensure that effective competition is preserved in pesticide and plant growth regulator markets after the takeover,” said the EC.

“This is because in all product markets with problematic overlaps ChemChina will divest either Adama’s or Syngenta’s product.

“The sale of Adama’s products under development also ensures the viability and competitiveness of the divested business on a lasting basis.

“The buyer of the divested assets will be able to compete sustainably with the parties to the benefit of European farmers and consumers. As a result, the Commission has approved the transaction.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.