ChemChina Said to Plan $10 Billion Sale of Preferred Stock

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ChemChina headquarters in Beijing.

Photographer: Fred Dufour/AFP via Getty Images
  • Sale to help fund record $43 billion acquisition of Syngenta
  • Banks are preparing to lend more than $25 billion for deal

China National Chemical Corp. is planning to sell $10 billion of preferred shares of a unit to help fund its record $43 billion acquisition of Syngenta AG, according to people familiar with the matter.

Under the proposal, half of the preferred shares on sale would be convertible, according to the people, who asked not to be identified because the discussions are private. ChemChina plans to raise another $15 billion in cash, bringing the total equity contribution to $25 billion, and borrow the rest it needs via a loan package, according to the people.

Representatives at ChemChina didn’t immediately respond to calls and e-mails seeking comment.

Syngenta shares closed 0.2 percent higher at 373.10 Swiss francs in Zurich Tuesday, giving the company a market value of 34.5 billion francs ($35 billion).

The fundraising would put state-owned ChemChina a step closer to completing the country’s biggest-ever acquisition outside its borders and help the government secure technology that could help feed the world’s most populous nation. Still, hurdles remain as the deal is still subject to regulatory approvals in the U.S. during an election year.

The preferred shares are poised to be sold to government-linked entities, according to two separate people familiar with the matter, who declined to name the buyers.

On the debt portion of the fundraising, ChemChina’s lenders are preparing to line up a $12.7 billion in bank financing in addition to a $20 billion loan in March, according to the people.

Syngenta has said it expects the deal, which is being reviewed by the Committee on Foreign Investment in the U.S., or CFIUS, will be completed by the end of 2016. CFIUS can recommend to the president that transactions be blocked if they are deemed to pose a risk to national security.

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