EU Probes ChemChina-Syngenta Bid on Crop-Protection Concerns

  • EU sets March 15 deadline to finalize in-depth merger probe
  • EU flags possible overlaps between Syngenta and Adama unit

China National Chemical Corp.’s $43 billion takeover of Syngenta AG faces a lengthy probe by European Union regulators amid concerns the deal might raise prices or reduce choice for crop-protection products sold to farmers.

The European Commission set a March 15 deadline to review the transaction, killing off the companies’ hopes of a quick approval. Syngenta earlier this week delayed plans to complete the deal by end-2016, saying approval is more likely to come in the first quarter of next year as regulators seek a large amount of information on the transaction.

"This deal would lead to the combination of a leading crop-protection company with one of its main generic competitors," EU Competition Commissioner Margrethe Vestager said in an e-mailed statement on Friday. "We need to carefully assess whether the proposed merger would lead to higher prices or a reduced choice for farmers."

The ChemChina transaction is one of a trio of mega-deals reshaping the global agrichemicals industry already described as “quite concentrated” by the bloc’s antitrust chief. EU watchdogs opened an in-depth probe into a Dow Chemical Co. and DuPont Co. tie-up in August. EU lawmakers and environmental campaigners have been calling on Vestager to block Bayer AG’s bid for Monsanto Co.

Syngenta and ChemChina "intend to continue constructive discussions with the EU authorities in order to conclude the review as early as possible," they said in a statement.

‘Important’ Competitor

The EU flagged concerns that ChemChina’s Adama unit "may be an important generic competitor of Syngenta" in several markets for crop-protection products including herbicides, insecticides and fungicides used on several of the main crops grown in Europe. The companies have "relatively combined market shares in many of these markets" and at least some products may compete directly with each other, it said.

Regulators will also examine whether the deal would affect the company’s supply of active ingredients sold to other manufacturers to make crop-protection products. They said they’ll work with antitrust authorities in the U.S., Brazil and Canada on the probe.

Syngenta shares fell as much as 9.1 percent in Zurich trading on Monday after the EU confirmed the companies hadn’t made concessions that might allow them win approval without an extended merger investigation.

Syngenta is "highly confident that our deal will get passed,” Chief Executive Officer Erik Fyrwald said after publishing earnings on Tuesday. “There may be some regulatory remedies, and we are prepared with regulators to resolve that quickly, but there’s nothing to stand in the way of our deal getting done.”

EU scrutiny has also delayed Dow’s $59 billion merger with DuPont. Plans to close the deal this year have been pushed forward until February as antitrust officials examine possible competition issues in pesticides and crop seeds. Dow Chief Executive Officer Andrew Liveris said regulators’ "greatest concern is agriculture." The EU has a Feb. 6 deadline to finalize their review.

Bayer and Monsanto haven’t yet filed with the EU for approval for their deal.

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