The deal, announced in February 2016, was prompted by China’s desire to use Syngenta’s portfolio of top-tier chemicals and patent-protected seeds to improve domestic agricultural output. It is China’s biggest foreign takeover to date.

It is one of several deals that are remaking the international market for agricultural chemicals, seeds and fertilizers.

The other deals in the sector are a US$130 billion proposed merger of Dow Chemical and DuPont, and Bayer’s plan to merge with Monsanto. The trend toward market consolidation has triggered fears among farmers that the pipeline for new herbicides and pesticides might slow. Regulators have required some divestments as a condition for approving the Syngenta deal.

Based on preliminary numbers, around 80.7 per cent of Syngenta shares have been tendered, above the minimum threshold of 67 per cent support, the partners said in a joint statement.

The agreed offer is for US$465 per share. Syngenta shares closed on Thursday at 459 Swiss francs (C$639.64).

The transaction is set to close May 18 after the start of an additional acceptance period for shareholders and payment of a special five-franc dividend to holders of Swiss-listed shares on May 16. Holders of U.S.-listed depositor receipts will get the special dividend in July.

Syngenta shares will be delisted from the Swiss bourse and its depository receipts from the New York Stock Exchange.

CEO Erik Fyrwald played down the transition from publicly-listed group to becoming part of a Chinese state enterprise, stressing that Syngenta would remain a Swiss-based global company while under Chinese ownership.

“It is very important to understand that this is a financial transaction,” he told broadcaster CNBC in an interview.

He saw two major changes: giving Syngenta a long-term shareholder to accompany it during the 12 years it typically takes to discover and launch new products, and helping to overhaul Chinese agriculture, which he called very much behind the global standard.

He said he expected the acceptance rate to easily surpass 90 per cent, with a squeeze-out of remaining shareholders to follow if needed in June.

Funding for the acquisition was clear and irrevocable, while refinancing the company after the transaction closed was still being discussed.

“I am very confident we are going to have a strong balance sheet as agreed,” he said, with an investment-grade rating that would let it pursue market share growth, investments, capital spending and acquisitions.

Syngenta sells its crop protection products in more than 90 countries including Canada under brand names including Axial, Cruiser, Matador and Quadris. It also sells seeds such as cereals, corn, rice, soybeans and vegetables.

ChemChina’s holdings include ag chem manufacturer Adama, which markets mainly off-patent crop protection products in Canada and over 100 other countries.

Among the countries whose regulators’ approval was required, Canada signed off on the Syngenta deal with a “no action” letter from its Competition Bureau in February.

— Reporting for Reuters by Michael Shields. Includes files from AGCanada.com Network staff.

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The transaction is important for China, the world’s largest agricultural market, which is looking to Syngenta’s portfolio of chemicals and patent-protected seeds to help bolster food supplies for its huge population.

“ChemChina and Syngenta have made significant progress towards achieving the necessary regulatory approvals and closing the transaction,” Syngenta said on Wednesday, as it reported slightly better than expected core earnings for 2016 that signalled the year-long takeover saga has not affected business.

The company said it did not plan to pay a dividend on 2016 earnings. Analysts had expected a payout of 11.60 Swiss francs a share, up from 11 francs last year, but any such payout would have been offset by a deduction from the offer price anyway, according to the public tender offer.

Syngenta shares rose 1.2 per cent to 430.30 Swiss francs (C$570.04) in early trade, but are still below ChemChina’s offer of $465 per share plus a special dividend of five francs.

“We still see very high odds (90 per cent) of the deal’s successful closure,” Bernstein Research analyst Jeremy Redenius said in a note.

Potential antitrust hurdles have gripped investors’ attention as two other major tie-ups in the pesticides and seeds industry are being scrutinized by regulators across the globe: Bayer’s acquisition of Monsanto and the merger of Dow Chemical and DuPont.

Agrochemicals firms are racing to consolidate amid pressure on farm incomes and improvements in technology that are linking pesticides and seeds more closely together.

The target closure date for Syngenta’s takeover was last year postponed to the first quarter of 2017, but EU antitrust regulators in January extended the deadline for their decision to April 12.

Approvals from 13 regulatory authorities have been won but go-aheads from Brazil, Canada, China, the European Union, India, Mexico and the U.S. are still outstanding.

“ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure,” Syngenta said.

CEO Erik Fyrwald told Reuters he was confident the deal would win approval from China’s MOFCOM regulator without causing any delay. The deal was making good progress with U.S. and EU regulators as well, he said.

ChemChina is set to secure conditional EU antitrust approval for its bid, the largest foreign acquisition by a Chinese company, two people familiar with the matter told Reuters last week.

Bridge financing to close the deal was in place and irrevocable, finance chief Mark Patrick said, while the partners were working on the structure of longer-term financing.

Syngenta said it planned to push its annual meeting to June, given it was close to completing the deal.

It reported 2016 earnings before interest, tax, depreciation and amortisation (EBITDA) of US$2.66 billion on sales of US$12.79 billion. Analysts in a Reuters poll had on average expected EBITDA of US$2.61 billion on sales of US$12.85 billion.

UBS analysts said EBITDA in the second half was solid, “which bodes well for (agriculture) peers BASF and Bayer as well as suppliers such as Lanxess and Croda.”

For 2017, Syngenta said it was targeting low single-digit percentage growth in sales at constant exchange rates, an improvement in the EBITDA margin and strong free cash flow.

— Reporting for Reuters by Ludwig Burger in Frankfurt and Michael Shields in Zurich.

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Clinching China’s biggest-ever foreign acquisition is taking longer than planned amid a flurry of deals in the agriculture sector that Syngenta, the world’s biggest pesticides maker, said on Tuesday had swamped competition watchdogs.

Syngenta expects the transaction to close around the end of March 2017, rather than this year as first planned, but insisted it would go ahead despite increased scrutiny by watchdogs gauging the impact of big deals on farmers and consumers.

Syngenta’s deal with ChemChina is one of two under EU scrutiny, while another mega-deal involving Bayer and Monsanto is expected to land on the regulator’s desk in coming months.

Bayer and Monsanto have not formally requested EU approval but the European Commission has to consider this deal as well when assessing the ChemChina and Syngenta linkup, and another deal involving DuPont and Dow Chemical, to take into account the changing landscape, said an EU official.

Syngenta stock plunged more than nine per cent on Monday after a European Commission spokesman said the companies had not offered concessions to get the deal through, raising concerns about the likelihood of a longer, full investigation.

ChemChina submitted a proposal to the Commission in September, including a plan to divest some $20 million worth of assets from its agrichemical subsidiary Adama Agricultural Solutions, the Beijing-based source told Reuters (all figures US$).

But the Commission raised “a more detailed menu of possible remedies” last week, said the source, who declined to be identified because he was not authorised to speak to the media.

ChemChina is ready to cooperate fully with the Commission and come up with a satisfactory solution, the source added.

Another person close to the deal said there is very little overlap in technology and products between ChemChina and Syngenta and therefore total concessions on offer will remain low, adding that targeted divestments are in the “low double-digit million” dollars area.

The Monsanto takeover of Bayer had changed the shape of the agrichemicals sector and the European Commission would therefore take more time to look into the ChemChina-Syngenta deal, the person said, adding a couple of months to the deal timeline but unlikely derailing the transaction.

A ChemChina spokesman was not immediately available.

The Commission sometimes opens a full investigation to get a better understanding of complex takeovers, whereby some are eventually cleared with no or minor concessions, though this is probably not the case for ChemChina because of the wave of consolidation moves and the diverse interests involved.

Regulatory review

Regulatory scrutiny over the ChemChina-Syngenta deal comes as global agricultural chemicals makers bulk up to better compete with each other.

Dow and DuPont plan a $130 billion merger, while Bayer aims to buy Monsanto for $66 billion.

Syngenta CEO Erik Fyrwald told Reuters he expected the EU anti-trust watchdog to take its regulatory review of the ChemChina deal to a second phase once the Oct. 28 deadline for fast-track approval passes.

“I think it is likely and we are expecting it, but it is not certain,” Fyrwald said. “The process was going along and then on Sept. 14 … the Bayer and Monsanto deal was announced, since then in both the U.S. and the EU there has been a very large escalation in data requests and questions.”

The Commission declined comment.

Fyrwald dismissed suggestions that the deal could be complicated by a possible merger of ChemChina and Sinochem.

“We talk to ChemChina regularly on a range of issues… and they have repeatedly assured us that they are not in any discussions about merging with Sinochem,” he said.

Fyrwald declined to comment on the regulatory impact of the other two big deals in the pipeline. “But I can tell you that the regulators are taking a very close look at everything.”

Syngenta reported third-quarter sales of $2.5 billion, down three per cent year-on-year at constant exchange rates. The average forecast from analysts polled by Reuters was for sales to ease 0.5 percent.

Syngenta stock rose 1.8 percent to 404.70 Swiss francs by 9:30 a.m. GMT, still well below the ChemChina offer price of $465 in cash per share plus a five-franc special dividend, worth a total of around 467 francs.

Liberum analysts, who rate Syngenta “buy,” valued Syngenta at 357 francs per share should the deal not go through. ChemChina’s offer also includes a break fee of $3 billion, or 32 francs per share, for an overall fair value of 389 francs, they wrote in a note.

— Reporting for Reuters by Chen Aizhu in Beijing and Michael Shields in Zurich. Additional reporting for Reuters by Oliver Hirt in Zurich, Foo Yun Chee in Brussels and Arno Schuetze in Frankfurt.

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