Board backs ChemChina bid to buy Syngenta

UPDATED: China National Chemical Corp on Wednesday offered to buy Syngenta for $43 billion, the Swiss pesticide giant said in a statement, in what would be the biggest-ever overseas acquisition by a Chinese firm.

Board backs ChemChina bid to buy Syngenta
Photo: AFP

Syngenta's board recommended the offer of $465 a share, plus a special dividend, to its shareholders, saying “the proposed transaction respects the interests of all stakeholders”.
It said the deal “will enable further expansion of Syngenta's presence in emerging markets and notably in China.”
The deal outstrips China Unicom Hong Kong Ltd's purchase of China Netcom Group Corp for $28 billion in 2008, according to data from Bloomberg.
An analyst at Germany's Baader Bank said prior to the announcement that a deal would be welcomed by investors “because it is entirely in cash”.

However, “it could pose political problems,” he said.
Last month, ChemChina said it would buy Germany's KraussMaffei Group, which makes machinery for producing plastics and rubber, for €925 million ($1 billion).  

The state giant also in January announced it had bought a 12 percent stake in Geneva-based energy and commodities trader Mercuria in a bid to expand its portfolio.

Last year it announced the takeover of Italian tyre maker Pirelli, renowned for its Formula One equipment and racy calendars, in a deal valued at 7.4 billion euros.

“Their acquisition strategy is not 'catching up' anymore,” said Tyler Rooker, an assistant professor at the University of Nottingham.

“They're acquiring assets that add to their competitiveness as global multinationals.”

Syngenta said its existing management will continue to run the company, headquartered in Basel.
A ten-member board of directors will be chaired by Ren Jianxin, Chairman of ChemChina, and will include four of the existing Syngenta Board members, it said.
Michel Demare, Chairman of Syngenta, said: “In making this offer, ChemChina is recognizing the quality and potential of Syngenta's business.
“This includes industry-leading R&D and manufacturing and the quality of our people worldwide,” Demare said.

“The transaction minimizes operational disruption; it is focused on growth globally, specifically in China and other emerging markets, and enables long-term investment in innovation,” he said.
“Syngenta will remain Syngenta and will continue to be headquartered in Switzerland, reflecting this country's attractiveness as a corporate location.”

Syngenta last year fended off takeover bids from US-based Monsanto.

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Swiss NGO links Syngenta pesticide to Indian farmer deaths

The Swiss NGO Public Eye called on Tuesday for an export ban on the pesticide Polo, produced by agriculture giant Syngenta, implicating it in the death of 20 Indian farmers last year.

Swiss NGO links Syngenta pesticide to Indian farmer deaths
A man outside Sygenta HQ in Basel in 2017. File photo: AFP

Syngenta, bought by ChemChina for $43 billion in 2017 in China's largest ever foreign takeover, has rejected the allegations by Public Eye.

“There is absolutely no evidence to suggest that Syngenta's product Polo was at all responsible for the incidents that have occurred,” the company said in a statement. 

Last September, officials in the western Indian state of Maharashtra reported that 20 farmers had died and hundreds of others were in hospital after inhaling poisonous pesticides while spraying crops.

After visiting the affected Yavatmal region and interviewing farmers and their relatives, Public Eye said there was strong evidence that Polo — specifically its active agent diafenthiuron — was responsible for the 

Public Eye noted that while the evidence was not conclusive, the spraying of Polo was a common link among those who died or fell sick. 

The NGO also said farmers in Yavatmal likely inhaled excessive amounts of the insecticide last year as cotton plants grew higher than normal, forcing them to spray closer to their mouths. 

Officials in Maharashtra reportedly opened a criminal investigation targeting Syngenta over the deaths, but the status of the probe is not known. 

The European Union banned diafenthiuron in 2002. 

The Swiss government pulled it from the market in 2009 “for reasons of health or environmental protection”, according to official documents. 

Syngenta branded Public Eye's allegations “salacious and incorrect”.

In response to the spate of deaths and illnesses, the company said it “conducted stewardship programs in the district and adjoining regions, conducted doctor training programs and established mobile health clinics to 
support treatment of farmers who may have been affected.”

Syngenta noted that Polo “has been successfully and safely used by Indian farmers across the country for the last 14 years,” and that diafenthiuron is registered in 25 countries worldwide. 

Export ban?

While diafenthiuron cannot be used in Switzerland, it is produced in Monthey, in the Valais canton. 

Under current Swiss law, Syngenta has to inform the federal government about its diafenthiuron exports, including quantities and destination countries. 

Bern is then responsible for informing the recipient countries, so they are aware of the risks. 

Public Eye says this does not go far enough and that companies based in Switzerland should be barred from exporting products deemed unsafe for Swiss people. 

“The Swiss authorities must put an end to this policy of double standards,” the NGO said. 

Swiss voters will this Sunday vote in two referendums aimed at ensuring foodstuffs produced in Switzerland are sustainable, healthy and fairly-produced.

It urged backing for a motion introduced by federal lawmaker Lisa Mazzone calling for the prohibition of “the export of pesticides whose use has been banned in Switzerland due to their effects on human health or the environment.”