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ChemChina, Syngenta publish timetable and prospectus for takeover offer

March 8, 2016
Energy & Chemical Value Chain

A prospectus issued by ChemChina (Beijing) and Syngenta (Basel) on Tuesday provides more details on the proposed $43 billion acquisition of the leading global agricultural chemicals group by ChemChina.

The prospectus, issued a week earlier than expected, states that the takeover offer is set to commence on 23 March and run until 23 May, if not extended. The Swiss public tender offer will be open for an initial period of 40 trading days and may be renewed once or several times for subsequent periods of up to 40 trading days, pending satisfaction of all offer conditions, including receipt of all regulatory approvals. ChemChina intends to align the timelines of the US offer with those of the Swiss offer, and the whole transaction is expected to close by the end of 2016.

Syngenta’s break fee–the amount payable to ChemChina if the deal is terminated at Syngenta’s request–has been reduced from $1.5 billion to $848 million, as agreed between the Swiss Takeover Board and ChemChina. ChemChina would have to pay a $3 billion reverse break fee, as previously agreed, unless Syngenta is forced to divest more than $2.68 billion or 20% of sales, to resolve antitrust and CFIUS (the Committee on Foreign Investment in the US) issues; or ChemChina loses control of more than $1.54 billion sales to resolve CFIUS-related concerns.

The prospectus says ChemChina has secured full financing and could replace part or all by equity funds from its own resources and several third parties. The prospectus does not provide a timeline for an initial public offering of Syngenta’s shares but says that ChemChina would float a portion of Syngenta’s shares over “the next years.”

ChemChina has agreed to several governance provisions that will remain in place until the earlier of (1) five years following the first settlement date of the offer and (2) the relisting of Syngenta shares through an IPO. During this period, there will be four directors unaffiliated to ChemChina on the 10-member Syngenta board. At least two of these independent directors would have to approve specified major changes, including any change of location of Syngenta’s headquarters and any reduction of the R&D budget in any given year to a level below 80% of the average R&D spend in the years 2012-15.

In addition to its own advisors Goldman Sachs and J.P. Morgan, Syngenta mandated N+1 Swiss Capital, a Swiss corporate finance advisory firm, to issue a fairness opinion on the offer. This company determined a valuation range of 400.61-464.55 Swiss francs per Syngenta share, and thus concluded that the ChemChina offer price, equivalent to SF480 per share, was fair and adequate.

In the event of a third party intervening, ChemChina would have at least five trading days to respond to a higher offer.

By Natasha Alperowicz

Source: Chemical Week

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