Are ChemChina and Syngenta submitting to ‘minor concessions’?
China National Chemical Corp (ChemChina) and Swiss pesticide and GMO seed maker Syngenta may have “proposed minor concessions to the EU’s competition watchdog” in order to allay fears over their $43 billion merger, according to Reuters, which cited an anonymous source in the matter.
Reuters claimed that ChemChina would not have to go as far as selling Adama Agricultural Solutions Ltd. Rather, discussions were progressing with respect to certain specific products. According to Reuters’ source, “overall divestments would be less than $500 million. It’s about individual products where competition is scarce.” Some of those products, this person continued, were “only worth tens of millions of dollars.”
Reuters cited a second anonymous source that it claims is close to the deal: “my understanding is that [divestments] are very minor.”
A ChemChina spokesperson told Reuters that “details of the remedy proposals were confidential,” and a Syngenta spokesperson offered a similar response, saying: “Syngenta confirms that remedies related to the deal with ChemChina have been submitted to the EC. We will not comment further on that. ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure.”
Following approval from regulators in the majority of markets, this hurdle is widely seen to be the last significant one to the deal.
Reuters sought the opinion of two further sources. The first, Ioannis Kokkoris, Chair in Law and Economics at Queen Mary University of London, told them that divesting Adama was the quickest route to approval:
“That ChemChina has not done this yet suggests it is trying to mitigate a full divestment of Adama, such as by selling a number of significant activities. The other scenario is that it has agreed to divest Adama and is now discussing top-up remedies.”
The second is an unnamed “senior Beijing-based industry executive” who, despite being knowledgeable in the matter, was not authorized to discuss it with the media. He told the news outlet:
“The companies have identified a list of products that may have caused the Commission’s concerns in respective countries. Although the progress has taken slightly longer than expected, communication with the Commission has been smooth.”
Dominion holds Syngenta in its Global Trends Managed Fund.
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