The Chinese takeover of the world’s biggest agribusiness, the farm chemical maker and seed breeder, Syngenta, looks set to be finalised by June.
China National Chemical Corporation (ChemChina) is paying almost $57 billion ($US43b) for the Swiss-based giant, promising a big injection into research and product expansion, particularly in the Asia-Pacific region.
Syngenta boasts a 20 per cent share of the global crop protection market, ahead of nearest rivals Bayer CropScience and BASF.
It’s chemical product range includes names such as Gramoxone, Axial, Touchdown and Amistar, plus cereal, horticulture, corn, rice and soybean seed lines.
State-owned ChemChina already owns the Israeli-based Adama agrichemical business, a prominent maker of off-patent crop protection lines sold in Australia.
It also owns, Pirelli, the world’s fifth biggest tyre business, plus industrial chemicals and petrochemical processing operations in Asia.
ChemChina ranks about 265 on Fortune Magazine’s list of top 500 global companies.
“Across Asia in particular there’s quite a lot of confidence about what ChemChina is driving for and wanting to invest in for the future,” said Syngenta’s Asia Pacific regional director, Tina Lawton, while in Australia last week.
“We’re keenly aware of the opportunities to grow in Australia, in Asia and particularly in China.
“We’re very comfortable we’ll have a new owner who wants to invest in all the things that make Syngenta, Syngenta.
Ms Lawton’s visit, which included on-farm meetings in southern Queensland, prompted plenty of inquiry about the looming merger and its implications for Australia.
“I’ve talked with a lot of stakeholders here and across Asia and I think they’re basically wanting us to just get on with it,” she said.
Syngenta’s Australian and New Zealand head, Paul Luxton, said farmers were “interested, but not anxious”, although they were “keeping their eyes on quite a few pieces in play in the crop protection industry”.
The ChemChina merger is the first of three agricultural chemical mega deals to reach a conclusion.
US giants, Dow Chemical Company and DuPont, are merging their entire operations in a $81b deal with plans to then spin off various divisions including the agricultural business, while Germany’s Bayer is buying Monsanto for $86b.
Ms Lawton said these mergers may also lead to Syngenta picking up additional business satellites or products which are stripped out of the Bayer-Monsanto and Dow-DuPont deals.
“Where it makes sense for us we will be serious about buying,” she said.
The Australian Competition and Consumer Commission gave its consent to the ChemChina takeover in December, followed by European Commissioner for Competition and the US Federal Trade Commission in the past month.
“Depending on how soon Syngenta shareholders transfer their shares, our expectation is the whole transaction may be completed well before June 30,” said corporate affairs spokesman, Andrew McConville.
Singapore-based Ms Lawton’s Australian visit coincided with the company’s Australian operation hosting 14 agronomists from across Asia, giving the visitors a first hand insight into a host of management, productivity and post-farm supply chain issues in developed agricultural economies, particularly the cereal, cotton and vegetable sectors.
In the Lockyer Valley, the Hood family’s Gatton vegetable business, Rugby Farm, was a tour highlight, emphasising not just mechanised production processes and the value of crop quality control, but also close working relationships with supermarkets.
To encourage farmers to invest in good crop protection management and products Syngenta is set to expand its AgriClime drought compensation package into Asia.
AgriClime repays farmers 15pc of their investment in chemical products if rainfall does not meet a threshold level during the growing season.
“Rainfall is one of the biggest challenges farmers face, so our focus is on helping build confidence in new technology by giving producers a cash-back incentive to help their costs if it doesn’t rain when they need it,” Ms Lawton said.
“We’ve had a good uptake in Australia. The roll out into developing markets is now starting in eastern India.”
With smartphone use booming in developing Asia, Syngenta is also promoting farm sustainability and information packages via mobile devices to guide farmers through agronomic challenges common to farmers everywhere, from chemical resistance management, to seed spacing accuracy and water and soil nutrition planning.
The smartphone technology complements company-fostered demonstration farms highlighting good agronomic practices, which achieve up to 30pc yield increases and are then duplicated in village trials.