Syngenta Deal Faces Possible Delay -- WSJ
October 25 2016 - 3:03AM
Dow Jones News
By Brian Blackstone and Natalia Drozdiak
Syngenta AG and China National Chemical Corp. didn't submit
proposed remedies to resolve potential antitrust concerns related
to their planned merger by last Friday's deadline, an EU official
said Monday, raising concerns about how quickly the deal would gain
regulatory approval.
Shares in Syngenta were off 5.8% at 397.50 Swiss francs
($400.06) late Monday.
European regulators have set an initial deadline for the merger
probe for Oct. 28 to decide whether to clear the deal
unconditionally, or open an in-depth investigation, which would
last several more months and likely lead the EU to demand
concessions from the parties.
Swiss seed and pesticide maker Syngenta said Monday that
"constructive" discussions with EU regulators over its proposed
purchase by Chinese state-owned ChemChina are continuing and that
an update would be issued by Syngenta on Tuesday, along with a
third-quarter trading statement.
Syngenta has previously said the deal should close by the end of
this year. Analysts at Baader Helvea Equity Research said the
latest developments shouldn't derail the deal, though it could be
delayed.
"Political intervention actions were always expected by us and
therefore we have always stated that the guided closing at the end
of 2016 seems ambitious to us," they said. "However, we do not
think that the deal is at risk" and should close in the first half
of next year, they said.
In February, Syngenta agreed to be acquired by ChemChina for $43
billion in cash. The deal faces regulatory reviews, particularly in
regions with large agriculture sectors that include the EU, U.S.
and Brazil.
The EU's review into the Syngenta-ChemChina deal comes as other
rivals in the industry also plan to merge.
EU antitrust regulators have opened an in-depth investigation
into the proposed merger of Dow Chemical Co. and DuPont Co., which
could require the companies to make bigger concessions to clear
their blockbuster deal. Meanwhile, Monsanto Co. recently agreed to
sell itself to Bayer AG.
While antitrust lawyers have said the deal between Syngenta and
ChemChina is fairly complementary and might be less problematic
than the other deals, other issues might arise in the EU's merger
review.
The EU is likely to examine whether other Chinese state-owned
companies active in the agrochemical sector would have to be
grouped in with ChemChina. If considered to be part of a wider
group of companies, that could then increase the possibility of
ChemChina's overlaps with Syngenta.
Write to Brian Blackstone at brian.blackstone@wsj.com and
Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
October 25, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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