Chemicals Sector Forges Ahead in M&A Activity

In a move announced on 5th April 2017 and comes hot on the heels of last month’s high profile DowDuPont mega-merger, valued at $130bn, ChemChina has won conditional EU antitrust approval for its $43 billion bid for Syngenta, a Swiss pesticides and seeds group.

The deal, expected to close in the second quarter of 2017, is another recent acquisition that is set to redefine the global agricultural chemicals market. The takeover gives a nod towards acknowledging that it is important for European farmers to keep sufficient competition in the pesticide market, while at the same time giving the China-based business scope to boost its domestic agricultural output within the overseas chemicals market place.

European Competition Commissioner, Margrethe Vestager, was clear that competition in the sector would remain “effective” and that planned asset sales would address any concerns.  Plus, Syngenta shares were trading up 1.1 per cent after the antitrust clearance was announced. US antitrust authorities also agreed to the deal on the condition that ChemChina divests three product lines.

Accordingly, ChemChina will sell off a large chunk of its subsidiary Adama’s pesticide, herbicide and insecticide business, its seed treatments for cereals and sugar beet and a substantial part of its plant growth regulator business to American Vanguard, in a deal for an undisclosed fee.  Other major global players including BASF, FMC, Nufarm and Sumitomo have not yet commented on the deal.

Looking at other chemical industry news, Dutch firm AkzoNobel is continuing to delay its meeting with US company PPG Industries to discuss a possible takeover. The proposed $26.1 billion takeover is not opposed by Akzo’s shareholders, but heads of the business have confirmed their opposition to the deal on the grounds that the PPG proposal not only undervalues its business, but would present difficulties with competition regulators.

In a statement, AkzoNobel has announced that it remains firmly focused on unveiling its plans for its independent future, which will be presented on 19th April to all stakeholders.  Akzo has also indicated that it would prefer to sell its chemicals division, which represents approx. one third of company profits, and remain as an independent business rather than enter takeover talks with PPG Industries.

PPG remains determined to make an offer, although few hostile takeovers of publicly traded Dutch companies have ever been successful. In accordance with Dutch stock exchange rules, there must be a formal draft offer submitted by 1 June 2017 or the deal will have to stay off the table for six months.

Stay tuned to our blog for industry M&A news and updates, and get in touch with our experienced team with any questions you have about the mergers and acquisitions process and how Benchmark International can help you.

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