China Reform Said to Near Joining $43 Billion Syngenta Purchase

  • State-run fund in discussions to join ChemChina's record deal
  • Record acquisition draws interest from Asian sovereign funds

China Reform Holdings Corp., an investment firm charged with revamping state-owned enterprises, is in advanced talks to join China National Chemical Corp.’s proposed $43 billion purchase of Syngenta AG, people with knowledge of the matter said.

ChemChina has also been holding discussions with several other investors that could join its acquisition of the Swiss seeds maker, according to one of the people, who asked not to be identified as the information is private. Other Chinese state-backed entities, as well as sovereign funds from Asia and other parts of the world, have expressed interest in taking part in the deal, one person said. 

The administration of President Xi Jinping has pledged to overhaul China’s sprawling $16 trillion state sector by 2020, as he seeks to shore up an economy that grew last year at its slowest pace in a quarter century. China said in September it wants to broaden the shareholder base of government enterprises by bringing in private capital and directing state-owned funds to invest in strategic industries. 

ChemChina agreed earlier this month to buy Basel-based Syngenta in what would be the largest acquisition by a Chinese firm, a deal that will help transform ChemChina into the world’s largest supplier of pesticides and agrochemicals. Chairman Ren Jianxin said Feb. 3 that ChemChina has “so many” offers to help finance the takeover, including from potential equity investors and banks eager to lend for the deal.

Bloated Structure

The Chinese government aims to modernize state enterprises, improve their efficiency and simplify their bloated structures so they can compete with large international companies, according to a Sept. 16 statement from the nation’s cabinet. The state-backed Silk Road Fund, a $40 billion investment vehicle set up in 2014 to make deals overseas, said in June it will join ChemChina’s purchase of Italian tiremaker Pirelli & C. SpA by taking a 25 percent stake. 

China Reform was set up in 2010 by China’s State-owned Assets Supervision and Administration Commission, an arm of the cabinet that controls the biggest government enterprises. Last year, it bought 6 percent of a wireless infrastructure venture set up by China’s three state-run carriers with about 188 billion yuan ($28.7 billion) of assets.

The company agreed in 2014 to restructure the coal-to-chemical business of Chinese electricity producer Datang International Power Generation Co. China Reform has also taken over some smaller state enterprises, including China Printing (Group) Corp., as the country seeks to reduce the number of companies directly overseen by SASAC.

Representatives for ChemChina and SASAC declined to comment, while China Reform didn’t immediately respond to an e-mail seeking comment.

— With assistance by Dinesh Nair, Jonathan Browning, and Steven Yang

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