The company’s board of directors said that it has unanimously recommended the offer to shareholders as the deal is respectful of stakeholders’ interests.
The price for shares would be 100% in cash, said Michel Demaré, board chairman, in a video. “The board has concluded that the value offered by ChemChina appropriately reflects what Syngenta is for the franchise, products, business, innovation pipeline, as well as the quality of our people,” he added.
For shareholders, the deal offers a premium share price and opportunity for earnings multiples, he said.
If approved by shareholders, the deal would be subject to regulatory clearance, said company officials. The current timeline would look for a possible completion by the end of 2016.
“Syngenta is the world leader in crop protection having significantly increased its global market share over the last ten years,” said John Ramsay, chief executive officer, in a release. “This deal will enable us to maintain and expand this position, while at the same time significantly increasing the potential for our seeds business. It will ensure continuing choice for growers and ongoing R&D investment across technology platforms and across crops. Our commitment to cost and capital efficiency will remain unchanged.”
In the deal, ChemChina has said it will offer $465 for an ordinary share with an additional dividend for closing, said officials with Syngenta. The amount is about 480 Swiss francs for a share.
In the proposed agreement, the existing management with Syngenta would remain in place, said company officials. After it is completed, there is set to be a 10-member board of directors that includes four current members of the Syngenta board and that is chaired by Ren Jianxin, ChemChina chairman.
Demaré would become the vice chairman of the new board, said Ren.
“Syngenta will remain Syngenta,” said Demaré.
The company would continue to be based in Switzerland and there should be no major changes for customers or employees, he said. And, work is set to continue on the company’s long-term goals including innovation work and the Good Growth Plan.
“This is a deal for growth, growth in the sense of a commitment to invest in long-term innovation and market positions,” he said.
The arrangement also would give Syngenta the opportunity to expand its footprint into China and other emerging markets, said company officials. There it can offer its work in chemistry and promotion of environmental standards.
Previously, Syngenta turned down an offer from Missouri-based Monsanto, said company officials. However, that proposal offered a mix of cash and share options for shareholders and generated some questions about regulatory approval.
The deal with ChemChina does not raise the same regulatory questions as there is little business overlap, said Demaré.
Prior to the arrangement with Syngenta, ChemChina has acquired nine industrial companies in France, the United Kingdom, Israel, Italy and Germany.