Syngenta says ChemChina deal to stretch into 2017

SyngentaZURICH: Syngenta, the world’s largest pesticides maker, on Tuesday moved to reassure investors that the planned $43 billion takeover by ChemChina will go ahead even though it will miss the original forecast for the deal to close this year.

“In a context of industry consolidation, regulators in the EU and elsewhere have recently requested a large amount of additional information and we now expect the regulatory process to extend into the first quarter of 2017,” Chief Executive Erik Fyrwald said in a statement.

“ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure.”

Shares in Basel-based Syngenta fell as much as 9 percent on Monday after the European Commission triggered doubts about state-owned Chinese chemical company ChemChina’s bid for the Swiss group.

Fyrwald told Reuters that a swamped Commission had not had a chance to provide substantive feedback and he expects the anti-trust watchdog to take its regulatory review to a second phase once the Oct. 28 deadline for fast-track approval passes.

“I think it is likely and we are expecting it, but it is not certain,” he said in a telephone interview, emphasising that he expects the deal to close around the end of the first quarter of next year.

He dismissed suggestions that the deal could be complicated by a merger of ChemChina and Chinese peer Sinochem.

“We talk to ChemChina regularly on a range of issues, as you can imagine, and they have repeatedly assured us that they are not in any discussions about merging with Sinochem,” he said.

Syngenta reported third-quarter sales of $2.5 billion (2 billion pounds), down 3 percent year on year at constant exchange rates. The average forecast from analysts polled by Reuters was for sales to ease 0.5 percent to $2.6 billion.

Finance chief Mark Patrick said the company expects an “extremely challenging market” in 2017, given current crop prices, but that margins should still improve.

Shares in Syngenta were seen 0.1 percent higher in pre-market indications by bank Julius Baer.