US regulators clear Chinese deal

The decision removes significant uncertainty over the takeover of the world’s largest pesticides maker, after the two companies agreed a deal in February. The takeover still requires approval from anti-trust and other regulators in the US and other countries.

The bid for Syngenta, which is a major employer in Huddersfield, West Yorkshire, comes amid a spree of global acquisitions by Chinese companies that are looking for new markets.

Kepler Cheuvreux analyst Christian Faitz described the clearance by a US national security panel as a “major milestone for the deal”, adding in a note to clients that “approval removes a major potential hurdle and should come as a relief to Syngenta shareholders”.

A statement released by Syngenta said: “China National Chemical Corporation (ChemChina) and Syngenta today announced that the companies have received clearance on their proposed transaction from the Committee on Foreign Investment in the United States (CFIUS).

“We are not disclosing the details of the agreement with CFIUS to respect the confidentiality of the process,” a Syngenta spokesman said. “Any mitigation measures are not material to Syngenta’s business.”

Syngenta reiterated that it expected the deal to be finalised by the end of the year.

It said closing the transaction was subject to “anti-trust review by numerous regulators around the world and other customary closing conditions.

“Both companies are working closely with the regulatory agencies involved and discussions remain constructive.”

The CFIUS review is being watched closely by Monsanto Co, the world’s largest seed company, which is deliberating whether it should sell itself to Germany’s Bayer AG, Syngenta turned down offers to be acquired by Monsanto last year. The deal comes as China looks to secure food supplies for its population.

Syngenta is a key player in the market for pesticides and seeds. It has facilities in North Carolina, as well as a presence in California, Delaware, Iowa and Minnesota among other states.

Syngenta’s share price has significantly lagged ChemChina’s offer amid concerns over whether the deal would get through CFIUS.

Syngenta derives about a quarter of its sales from North America.

Syngenta had said this year it would make a voluntary filing with CFIUS “even though no obvious national security concerns were identified during due diligence”.

Earlier this year, Kamel Mellahi, a professor of strategic management at Warwick Business School, who has studied Chinese businesses for many years, said: “This is an acquisition driven primarily by growth strategy, and not potential synergies that usually result in cost cutting and reduction of workforce. So the deal is good news for both Syngenta’s shareholders as well as its employees.”

Syngenta, which was formerly known as Zeneca and ICI, has had a major manufacturing base in Huddersfield since 1916.

Today, around 380 staff are employed at Syngenta’s base in Huddersfield, where the company makes crop protection products that help growers meet the increasing demand for food, feed and fuel.