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ChemChina deal could open doors in China, Syngenta boss says

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Syngenta will be well placed to expand in China, after its acquisition by state-owned ChemChina, chairman Michel Demare said.

The board of Swiss-based Syngenta, the world's biggest agrichemicals group, has approved a $43bn takeover from ChemChina, the Chinese chemical giant.

Mr Demare noted the "major role" China plays in global agriculture, with a crop protection and seeds market already worth over $10bn.

Growth to come

"With the certainty of further demand growth and clear potential for improving productivity, China represents an enormous opportunity for providers of modern agricultural technology," Mr Demare said.

"Agricultural modernization is already underway, propelled in part by increased awareness of food safety and quality and environmental impact," Mr Demare said.

A scarcity of labour in rural areas is driving mechanization and increased input usage, while the move towards land consolidation is favouring more professional farming.

"With the transaction announced today, Syngenta will be in an ideal position to further advance these developments," Mr Demare said.

More to follow?

Mr Demare suggested that more acquisitions might follow, saying that ChemChina had "a very ambitious vision of the industry in the future".

The company was "committed" to continued acquisitions, as well as organic growth, Mr Demare said.

"Obviously it's very interested to secure food supply for 1.4b Chinese people and as a result of that knows that only technology […] can get them there."

Mr Demare said the attitude of ChemChina was "extremely exciting for Syngenta".

Culture and values

ChemChina last year bought Italian tyremaker Pirelli, and last month announced the purchase of German industrial machinery maker KraussMaffei Group.

Speaking of ChemChina's previous investments, Mr Demare said that the company had been concerned to "preserve the know-how, expertise, culture and values" of their acquisitions.

"Most important at the end is that Syngenta remains Syngenta, just with a different owner."

Syngenta will remain headquartered in Switzerland after the acquisition.

Regulatory hurdles

Mr Demare downplayed the potential regulatory hurdles to the deal.

"Regulatory in large transactions like this is always a hurdle that you have to go through."

"But, as I say, we are quite comfortable with that."

By Agrimoney.com

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