Syngenta-ChemChina Deal Closing Likely to Be Delayed
October 25 2016 - 4:40AM
Dow Jones News
ZURICH—Swiss seed and pesticide maker Syngenta AG said Tuesday
that regulatory approval of its proposed acquisition by ChemChina
is likely to be delayed into early 2017 as regulators seek more
information amid a consolidation wave in the sector.
"In a context of industry consolidation, regulators in the
[European Union] and elsewhere have recently requested a large
amount of additional information, and we now expect the regulatory
process to extend into the first quarter of 2017," Syngenta said.
"ChemChina and Syngenta remain fully committed to the transaction
and are confident of its closure."
Previously, the company had expected the deal with China
National Chemical Corp.—ChemChina's formal name—to close by the end
of this year.
Syngenta also reported third-quarter sales of $2.5 billion, down
3% from $2.62 billion during the same period in 2015 and broadly in
line with analyst expectations. Sales growth was led by the U.S.,
Asia and, to a lesser extent, Europe which offset weakness in Latin
America.
In February, Syngenta agreed to be acquired by ChemChina for $43
billion in cash.
On Monday, an EU official said Syngenta and ChemChina hadn't
submitted proposed remedies to resolve potential antitrust concerns
related to their planned merger by last Friday's deadline. This led
to a nearly 6% slide in Syngenta shares Monday as investors
questioned the timing of the deal's approval.
Shares were up 1.2% to 402.2 francs at 0720 GMT Tuesday.
In an interview Tuesday, Syngenta Chief Executive Erik Fyrwald
said that the announcement in September of the proposed acquisition
of Monsanto Co. by Bayer AG—which would create the world's largest
seed and pesticide business—prompted more requests for information
"than we'd ever seen before" from regulators regarding the Syngenta
and ChemChina deal.
Syngenta received data requests on crop, geography and active
ingredients, said Mr. Fyrwald. He said the companies didn't meet
last Friday's deadline because European regulators weren't ready to
provide feedback on the types of remedies they might seek.
Mr. Fyrwald expects the EU review to enter a Phase II process at
the end of this month, which can last 90 working days. "Regulators
are absolutely right to do their jobs," he said.
Still, Syngenta remains confident the deal with close.
"Given our deal has such minimal overlap, if there are to be
some remedies requested we would work with EU and [U.S. Federal
Trade Commission] to resolve these as quickly as possible," Mr.
Fyrwald said.
Write to Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires
October 25, 2016 04:25 ET (08:25 GMT)
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