Beijing – China made its boldest overseas takeover move when state-owned ChemChina agreed a 43 billion dollars bid for Swiss seeds and pesticides group Syngenta on Wednesday, aiming to improve domestic food production.
The largest ever foreign purchase by a Chinese firm, announced by both companies, will accelerate a shake-up in global agrochemicals.
marks a setback for U.S. firm Monsanto, which failed to buy Syngenta last year.
China, the world’s largest agricultural market, is looking for ways to secure food supply for its population.
Syngenta’s portfolio of top-tier chemicals, fertilizers and patent-protected seed varieties will represent a major upgrade of its potential output.
“Only around 10 per cent of Chinese farmland is efficient. This is more than just a company buying another.
“This is a government attempting to address a real problem,” a source close to the deal told media.
Years of intensive farming combined with overuse of chemicals has degraded land and poisoned water supplies, leaving China increasingly vulnerable to crop shortages.
The deal fits into Chinese government plans to modernize its agriculture over the next five years.
With growth slowing at home, Chinese companies are looking abroad for deals that can boost their businesses.
If completed, the Syngenta acquisition would be more than double CNOOC’s 17.7 billion dollars purchase of Canadian energy company Nexen in 2012.
Shares in Syngenta rose on news of the deal.
The deal could yet stumble over regulatory hurdles and limited expectations of a counter-offer is expected. (Reuters/NAN)