BRUSSELS, Belgium (Reuters) — ChemChina has won conditional European Union antitrust approval for its $43 billion bid for Swiss pesticides and seeds group Syngenta, a deal that could help China boost its domestic agricultural output.
The deal is one of several re-shaping the agricultural chemical and seed market, even as these deals trigger fears among some farmers that bigger, more powerful suppliers could be better placed to push up prices and economize on developing new herbicides and pesticides.
The European Commission said April 5 that planned asset sales would address its competition concerns.
“It is important for European farmers and ultimately consumers that there will be effective competition in pesticide markets, also after ChemChina’s acquisition of Syngenta,” European Competition Commissioner Margrethe Vestager said.
ChemChina will sell a large portion of its subsidiary Adama’s pesticide, herbicides and insecticides business, its seed treatment products for cereals and sugar beet and a substantial part of its plant growth regulator business for cereals.
American Vanguard said it struck a deal with Adama to acquire three crop protection product lines.
Bernstein Research analyst Jeremy Redenius said that because Adama focuses on established crop chemicals that have lost patent protection, potential buyers of other assets would likely be from the same industry segment, such as FMC Corp., Nufarm and Sumitomo Chemical.
Redenius said BASF was unlikely to bid because of its focus on patented substances.
Syngenta said the EU’s go-ahead was a major step toward closing the transaction, expected in the second quarter of this year.
Some of Syngenta’s pesticides will also be put on the block. The world’s No. 1 pesticide maker sells its products in more than 90 countries under such brand names as Acuron, Axial, Beacon and Callisto. It sells seeds such as cereals, corn, rice, soybeans and vegetables.
U.S. antitrust authorities approved the deal a day earlier on the condition that ChemChina divests three products.
The EU approval came a week after it cleared the $130 billion Dow Chemical and DuPont merger in return for hefty asset sales, including global research and development facilities.