ChemChina Ignores EU Remedies Submission Date

25.10.2016 -

Reports continue to circulate that ChemChina’s planned $43 billion takeover of Swiss agrochemicals producer Syngenta may not be going as smoothly as planned. Recently, the Chinese news outlet Caixin said the company was facing a $15 billion funding gap. Now, in response to a query, the European Commission’s press office has told the news agency Bloomberg that ChemChina failed to submit so-called remedies, or offers to make asset sales that would ease competition concerns, by the Oct. 21 deadline.

In reaction to the news, Syngenta’s share price slipped 5.6% in Zurich trading on Oct, 24, its steepest decline since August 2015. ChemChina notified the EU of its takeover plans on Sept. 23. Under EU rules, the Commission has until Oct. 28 to decide whether or not to approve this deal without any strings attached, which seems unlikely, or open an in-depth probe. The latter would add at least four months to the earliest approval date. The news agency pointed out, however, that companies often delay making commitments until a later stage of the anti-trust review.

A Syngenta spokesman told Bloomberg that “constructive discussions with the EU are ongoing” and the Swiss group would give a further update on the progress of the deal with its Q3 earnings statement on Oct. 25. Analysts said a prolonged EU investigation could also delay ChemChina’s potential merger with Sinochem as the Chinese government seeks to reshuffle the ownership structure of state-owned companies.

The EU competition authority currently has its hands full investigating several mega mergers sweeping the global agrochemicals sector. FormularendeThe Commission has already opened an in-depth probe into the fusion plans of Dow and DuPont worth $130 billion. It will also be looking into Bayer’s $66 billion bid for Monsanto.

Australia’s Competition and Consumer Commission has meanwhile announced that its scheduled Oct. 27 decision on the ChemChina takeover of Syngenta has been delayed “at the request of the merger parties so that they can provide more information.”

In related news, reports suggest that DuPont is planning to sell a herbicide business to help allay potential antitrust concerns about that transaction. Evercore Partners is said to have been hired to advise on the sale, which could generate several hundred million dollars.

Citing people “with knowledge of the situation,” Bloomberg reported additionally that DuPont is considering the disposal of insecticide and seeds units to facilitate approval of its merger with Dow and subsequent split into three companies. Rather than combine the smaller units into one package, the news agency said the Wilmington, Delaware, chemical giant is looking at individual asset disposals.