Success of merger a positive sign

Updated 2017-04-06 09:31:02 Global Times

Trump's pro-business stance may benefit both countries, experts say as ChemChina bid for Syngenta wins approval from U.S.

A decision by U.S. antitrust regulators to approve the acquisition of Swiss agribusiness giant Syngenta AG by Chinese conglomerate China National Chemical Corp (ChemChina) could offer a positive path for future merger and acquisition deals involving Chinese companies in the U.S. under President Donald Trump, Chinese experts said on Wednesday.

The U.S. Federal Trade Commission (FTC) on Tuesday gave tentative approval of the billion acquisition said to be the largest takeover by a Chinese company, which has been stalled by U.S. government scrutiny over potential antitrust law violations.

To gain final approval, ChemChina and Syngenta agreed to divest three types of pesticides: the herbicide paraquat, used to clear fields before growing season and the insecticide abamectin and the fungicide chlorothalonil used to protect crops, the FTC said in a press release.

“Without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta's branded products,” the press release said.

The move clears a critical hurdle for the deal proposed in February 2016, which gained approval from European regulators in 2016 and support from Chinese officials. China's Ministry of Commerce has called the acquisition “normal business activity” and urged the U.S. to treat Chinese companies fairly.

Such a move from the U.S. is a positive development for not only ChemChina but the domestic agricultural sector, according to Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant.

“ChemChina has been focusing on its 'go global' strategy for a long time, obviously this deal is a very significant step for the company in this regard,” Ma told the Global Times on Wednesday.

He said through the deal, ChemChina would gain larger market access in the U.S. and Europe. “It would also gain Syngenta's advanced technologies and apply to the domestic industry,” Ma said, adding that the technology, despite concerns over genetically modified products among some Chinese consumers, could benefit China's agriculture sector.

More broadly, this offers a positive signal for future Chinese business deals in the U.S. under Trump, experts said.

“The deal was stalled under the Obama administration but approved under Trump in just a short period,” Ma pointed out, adding “despite all the talk about Trump's unreliability, I think Trump is a businessman, who would try to create a better environment for businesses and that is good for Chinese companies as well.”

The approval, coming just days ahead of a scheduled meeting between Chinese President Xi Jinping and Trump on Thursday, could also be viewed as a signal of U.S. willingness to pursue pragmatic cooperation with China, Han Bing, an expert at the Institute of World Economics and Politics Chinese Academy of Social Sciences, told the Global Times on Wednesday.

“The timing of the announcement is interesting … there might have been some political factors in play behind the deal,” he said, noting such a move could help create a better environment for the meeting of the two leaders.

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