Syngenta (Basel) unveiled its future growth plans following the completion of ChemChina’s $43-billion acquisition of the company.
At a press briefing in Basel on 27 June top executives, including Erik Fyrwald, CEO, and the newly elected board of directors headed by Syngenta’s new chairman Ren Jianxin, who is also chairman of ChemChina, said the company aims to profitably grow market share through organic growth and collaborations and is considering targeted acquisitions with a focus on seeds.
Separately, in response to CW’s question on whether ChemChina and Sinochem plan to merge, Ren said this is only a rumor and added that ChemChina’s finances are back on track following completion of the Syngenta deal. Meanwhile, Robert Lu, vice president of ChemChina, told CW that the remedies that ChemChina agreed to with the various antitrust authorities to get approval for the acquisition were not very large. ChemChina will divest assets with combined sales of just $240 million, including Syngenta and assets to be sold by Adama-Sanonda, the generics agchems business owned by ChemChina. “We are not obliged to disclose the figure but this is the ballpark,” Lu says.
Fyrwald said that Syngenta is currently a distant third in seeds with a 7% share of the global seeds market. Its seeds sales last year were $2.7 billion, trailing Monsanto with 27% of the market and DuPont with 17%. In response to CW’s question on whether Syngenta is interested in buying Bayer’s LibertyLink franchise, which is up for sale as part of remedies to get approval for the Bayer-Monsanto deal, Frywald said that Syngenta is very interested in deals that form part of required remedies and beyond.
Syngenta also wants to strengthen its leading position in crop protection. Crop protection sales in 2016 reached $9.6 billion, accounting for 20% of the global market. The plan is to grow market shares in both seeds and crop protection to strengthen the company’s leadership position in crop protection and to become an ambitious number three in seeds, Frywald said. Key drivers for the next phase will be further expansion in emerging markets, notably China, the stepping up of digital agriculture offers, and ongoing investment in new technologies to increase crop yields while reducing CO2 emissions and preserving water resources.
Ren reaffirmed that Syngenta’s operational independence will be maintained and the existing management team will continue to run the company. “We share Syngenta’s strategic and long-term vision and look forward to supporting Syngenta’s growth, product offering and services.” Ren said that ChemChina plans to list Syngenta with the timing dependent on market conditions but within five years. Michel Demare, vice chairman of Syngenta, noted the historic significance of the deal. “Not only is it the largest acquisition ever made by a Chinese company, but also it is a deal focused on growth.
Syngenta’s major focus is to grow in the emerging markets and particularly in China’s fragmented agricultural chemicals market valued at $10.6 billion. Last year, Europe, Africa and the Mideast accounted for $4.0 billion of Syngenta’s $12.8 billion sales, followed by North America at $3.5 billion, Latin America $3.3 billion, and Asia/Pacific $1.9 billion. China is still a small market for Syngenta with sales of about $400 million. But Syngenta is ready to support China’s agricultural modernization, a strategic priority under the government’s current five-year plan.
By Natasha Alperowicz
Source: Chemical Week
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