Chinese National Chemical Corp. is about to take over Swiss-based Syngenta for $43 billion deal and is outstretching its offered shares of $465 by more than a month while it waits for regulatory approval for its acquisition of the Switzerland-based seed and pesticide maker.
ChemChina is offering to buy Syngenta for $465 a share including a special dividend in February. The extension of the main offer was shale to July 18 with possible further extensions to be distinguished where March 23 was the previous deadline.
The Chinese company targets the end of 2016 to close the deal considered to be the largest acquisition by a Chinese firm. While waiting for the transaction to get approved by the anti-trust authorities in Europe and elsewhere, the most difficult examination will be anticipated from the Committee on Foreign Investment in the United States (CFIUS). The U.S. Department of Agriculture (USDA) corresponded to join the U.S. state panel in reviewing the deal, Bloomberg reports.
Syngenta shares jumped 10% to $80 on February 3 after the public offering. The shares increased modestly but steadily to $84 before declining again to $80. Based on today's level, there's 16% an upside potential if the deal pushed through. This indication will jeopardize the deal and will possibly not push through.
Basically, everything seems to be working as planned. Both companies have agreed on the arrangement and are advocated by the board and management of Syngenta. Last year, after repelling Monsanto's effort to take over Syngenta, ChemChina had to modify its strategy and after CEO Mike Mack's exit, it became apparent that it could not remain self-sufficient anymore, as reported by Seeking Alpha.
Syngenta is based in North Carolina and draw almost a quarter of its earnings from North America and an important seller of seeds. It has other facilities located in North Carolina, California, Delaware, Iowa and Minnesota.
According to Reuters, Syngenta stated that it would make a voluntary filing with CFIUS regarding its deal with ChemChina "even though no obvious national security concerns were identified during due diligence."
Up to the time that approval is given, ChemChina may keep up extending the main offer period up to November 23. After the said date, the Swiss Takeover Board will have to sign off any beyond changes to the deadline. The arrangement asks at least 67% of Syngenta shares to be offered in order to conclude the transaction.
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