Market News & Headlines >> Step Forward for ChemChina-Syngenta Deal

Prospects for ChemChina’s proposed $43 billion takeover of Syngenta got a big boost on Monday when the deal was approved by a U.S. national security panel.

The news sent the price of Syngenta stock soaring by as much as 12.5% in Monday trade on the Swiss Exchange. The Swiss seed and chemical manufacturer’s shares finished the day up 10.6% at 421.20 Swiss francs.

The approval of the ChemChina-Syngenta buyout by the Committee on Foreign Investment in the United States (CFIUS) is seen as strongly boosting the chances that the deal will receive approval from anti-trust regulators. CFIUS reviewed the deal because more than 25% of Syngenta’s seed and crop protection revenue last year came from North America.

The two companies said in a joint statement on Tuesday that a number of anti-trust regulators around the world still need to approve what would be by far the biggest-ever overseas acquisition by a Chinese firm. That includes the U.S. Justice Department and Federal Trade Commission, which are conducting separate reviews, as well as the European Union regulators. 

The EU’s antitrust review is seen as the biggest remaining regulatory hurdle for the deal and the companies may seek to divest some assets to win approval, if necessary. 

The CFIUS approval garnered a good deal of attention in Washington since ChemChina is owned by the Chinese government. “The fact that a state owned enterprise may have yet another stake in U.S. agriculture is alarming,” said Sen. Charles Grassley, R-Iowa, the chairman of the Senate Judiciary Committee in a news release. 

Grassley has introduced legislation to permanently add USDA to the CFIUS review process and clarify that agricultural assets are considered critical national security infrastructure that CFIUS must consider before it approves any transaction.  On Tuesday, Grassley announced the Judiciary Committee would hold a late September hearing into the consolidation taking place in the seed and chemical industry.