5 Min Read
* Nearing deal worth about 470 SFr/share -sources
* Would mark largest cross-border deal by Chinese buyer
* Syngenta shares up 5.7 percent pct at 400 SFr (Adds breakup fee details, potential CFIUS review in the United States)
By Arno Schuetze and Pamela Barbaglia
Feb 2 (Reuters) - China's state-owned ChemChina is nearing a deal to buy Swiss seeds and pesticides group Syngenta for around 43 billion Swiss francs ($42.2 billion), two people familiar with the matter said on Tuesday.
The deal, for roughly 470 Swiss francs per share, would be the biggest cross-border deal involving a Chinese buyer and mark an acceleration of a shakeup in the global agrochemicals industry. Negotiations are in final stages but nothing has been signed, the two sources said.
It will likely be announced on Wednesday, when Syngenta is scheduled to release 2015 results, the people said.
One source said minor adjustments to the price were still being discussed.
Syngenta shares closed 3.7 percent higher at 392.30 francs in European trade on Tuesday.
ChemChina's offer would be at a premium of about 24 percent to Syngenta's Monday close of 378.40 francs.
Syngenta will not have to pay a considerable breakup fee if the buyout fails, the two sources said. While this potentially leaves the door open for peers including U.S. seed company Monsanto Co or BASF SE to top ChemChina's offer, the people said that Syngenta was not actively soliciting counter bids.
Syngenta last year spurned takeover approaches from Monsanto, arguing it can create value on its own.
Last month, Monsanto's CEO said attempts to re-engage Syngenta about a potential takeover had been difficult but that he believed there was still "a significant opportunity" for integration between the companies.
Syngenta declined to comment. ChemChina was not immediately available for comment outside regular business hours.
Bloomberg had reported earlier on Tuesday that the deal worth 43.7 billion Swiss francs was near. (bloom.bg/20DQ4KP)
Any deal would likely be reviewed by the U.S. Committee on Foreign Investment in the United States, which probes transactions with potential national security implications, but two CFIUS experts said they doubted that the inter-agency group would stop it.
"It looks like they (Syngenta) have a lot of U.S. operations but it doesn't look like they are sensitive," said one CFIUS expert, adding that he would be "very surprised" if the company failed to register the merger with the agency.
It is rare for CFIUS to stop a deal, although it did block Philips' sale of high-end lights to China's GO Scale Capital just last month.
Given other mergers in agricultural chemicals, such as DuPont's and Dow Chemical Co's agreement to combine, Syngenta Chairman Michel Demare recently conceded that "going it alone is hardly possible," given what shareholders were expecting.
The likely takeover price would nominally match Monsanto's revised cash-and-stock bid made last August but the value of that offer would have fallen along with Monsanto's share price.
ChemChina's move marks another instance of the country's quest for Western technology and distribution networks.
Similar transactions include last year's buyout of Italian tyre maker Pirelli by ChemChina. In January, ChemChina announced the acquisition of German industrial machinery maker KraussMaffei Group for about $1 billion.
The Chinese government is keen to boost farming productivity as it seeks to cut reliance on food imports amid limited farm land, a growing population and higher meat consumption.
A global glut of corn and soybeans has depressed grain prices for the past three years, prompting U.S. farmers to reduce spending on everything from equipment to seeds and pesticides. The cutbacks, along with pressure from investors and a desire to bolster profit, have sent many of the world's largest agricultural companies scrambling to cut deals.
The U.S. Department of Agriculture has estimated that net farm income sank to $55.9 billion last year, down nearly 55 percent from an all-time high in 2013. Prices for U.S. corn have halved from three years ago. ($1 = 1.0194 Swiss francs)
Additional reporting by Amrutha Gayathri in Bengaluru, Sue-Lin Wong in Hong Kong and Diane Bartz in Washington and Tom Polansek in Chicago; Writing by Ludwig Burger and Diane Bartz; Editing by Adrian Croft and Matthew Lewis