What happened in the first quarter? Syngenta seeds fell 4%, huge acquisition plan was protested.

Abstract:

 

 

According to the World Agrochemical Network, as of March 31, Syngenta's total sales in the first fiscal quarter of 2016 (including lawn and garden business) fell by 7%. Crop protection sales fell 8% to $2.604 billion, while seeds fell 4% to $0.979 billion.

 

At constant exchange rates, Syngenta's first-quarter consolidated sales reached $36 billion billion, unchanged from a year earlier. Sales were down 2%. Overall selling prices rose by 2 per cent, partly as a result of higher selling prices in the CIS countries to offset the impact of currency depreciation.

 

Sales in Europe, Africa and the Middle East increased by 6% in the first quarter of this year. Growers were depressed, especially in the French market, as crop prices fell, but overall sales were still up. Overall sales in North America fell 2 percent in the first quarter. Seed sales continued to grow due to strong corn seed sales, with trait licensing generating significant revenue. Sales in Latin America fell 12%. Sales in the Asia-Pacific region fell by 10%, as some countries continued to be affected by adverse weather caused by the El Niño phenomenon. Thailand's rice market continues to languish, with lower stocks and declining government support.

 

In terms of crop seeds, sales of corn and soybeans were affected by the decline in planting area due to the unfavorable market environment for soybeans in the United States. However, corn acreage is expected to increase, with a significant increase in U.S. corn sales due to an increase in trait licensing revenue, which fully offset the decline in corn sales in Europe and the Asia-Pacific region. The decline in vegetable seed sales in Europe, Africa and the Middle East was offset by market expansion in Latin America, Asia-Pacific and especially South Asia.

 

 

CEO John Ramsay said: "For the whole year, at a constant exchange rate, through the introduction of new products, our goal is to maintain the same sales as last year. The seed business is at the heart of decisions taken by growers and is an integral part of the integrated product supply. We decided to improve the profitability of our seed business. We have a competitive and sustainable market position in most crops, but in some specific areas, we are ready to consider options such as forming a joint venture company, acquisition or sale."

 

(Source: World Agrochemical Network)

 

 

Syngenta: To complete the deal with ChemChina by the end of the year

 

 

On the evening of April 26, Bloomberg said Syngenta shareholders approved a plan to pay a special dividend after ChemChina's $43 billion acquisition of Syngenta; management denied that the deal could be blocked by U.S. regulators.

 

Syngenta Chairman Michel Demare said at the annual general meeting on Tuesday that the regulatory review by the Committee on Foreign Investment in the United States is not a threat to the transaction.

 

Demare insisted that the deal with ChemChina was the best option for Syngenta shareholders, who supported a one-time dividend of 5 Swiss francs per share. Syngenta's goal remains to close the deal by the end of the year, Chief Executive John Ramsay said this month.

 

 

ChemChina's bid values Syngenta at about CHF 458 per share. At 13:21 London time, Syngenta's Swiss stock market fell 0.2 percent to 399.80 Swiss francs; investors saw the deal at risk of being delayed by regulators, including the Committee on Foreign Investment in the United States.

 

(Source: Sina U.S. Stocks)

 

 

Domestic460A private figure once questioned the huge sum of money in mergers and acquisitions.

 

 

According to the Beijing Business Daily, in April, 92-year-old former Minister of Chemical Industry and former member of the Central Committee, Qin Zhongda, and some groups and people recently submitted to ChemChina and relevant ministries and commissions the ''Opposition to ChemChina's Huge Merger and Acquisition of Genetically Modified Drug Company Syngenta to the State-owned Assets Supervision and Administration Commission of the State Council. "A letter of inquiry" protesting the acquisition of Syngenta by ChemChina. Relevant experts believe that as long as the relevant laws are not violated, the agreement of Sinochem Group to acquire Syngenta will be promoted, and the relevant departments related to product information should be announced in a timely manner.

 

The inquiry focused on questioning Syngenta's products and Syngenta's operations. According to the inquiry, in order for the SASAC to make the right decision and ensure the health of Chinese consumers, the private sector has put forward three requirements:

 

 

1. Syngenta publishes all toxicological animal test reports based on "pesticide registration" of glyphosate herbicide"

2. Syngenta must publish safety assessment documents such as toxicological animal test reports submitted when they applied for "pesticide registration" for atrazine, paraquat and dicamba in China.

3. ChemChina organized an open, transparent and fair hearing on the case of the acquisition of Syngenta for US $43 billion (about 300 billion yuan), and invited representatives of the National People's Congress, members of the National Committee of the Chinese People's Political Consultative Conference, various democratic parties and consumer representatives to attend.

 

 

The reason for these demands is that people who oppose mergers and acquisitions believe that the European Union and Switzerland have successively introduced bans on the use of pesticides such as atrazine (atrazine), clothianidin, imidacloprid, and thiamethoxam sold by Syngenta. On December 18, 2015, the Swiss Federal Council announced the extension of the ban on the cultivation of genetically modified plants to 2021. In this case, Syngenta was no longer popular in Europe and had to move its headquarters to the United States.

 

Not only that, Qin Zhongda and others believe that the genetically modified crops that Syngenta is actively developing will cause extensive and uncontrollable pollution to China's food crops, and cause serious harm to the health and food safety of Chinese consumers and the livelihoods of Chinese farmers.

 

(Source: Beijing Business Daily, Foresight Network, "Enterprise Says" and other reports)

 

 

Domestic voice: The acquisition is significant for the two companies.

 

 

Tong Pingya, a researcher at the Crop Research Institute of the Chinese Academy of Agricultural Sciences, said that Syngenta is currently experiencing the misfortune of entering China "unconvinced", the global decline of agrochemical products, and the expulsion of genetically modified corn from Europe.

 

Mao Xuefeng, an associate professor at the School of Agriculture and Rural Development of Renmin University of China, believes that in the Chinese market, Sinochem will achieve a counterattack, break the suppression of foreign companies in pesticides and seeds, and become a real multinational giant.

 

Ma Wenfeng, a senior analyst at Iger Agriculture, pointed out that Sinochem's acquisition of Syngenta may be successfully completed as long as it complies with legal procedures and is permitted by the governments of China and related countries.

 

A source said that China may use Syngenta's genetically modified technology to change the backwardness of food production, which will also rewrite China's view on the issue of genetically modified. ChemChina will buy Syngenta for about 470 Swiss francs per share in cash, with a premium expected to reach 24%.

 

 

Shen Danyang, a spokesman for China's Ministry of Commerce, said in February that the Ministry of Commerce supports the merger, which helps to ensure global food supply. On April 7, he once again pointed out that ChemChina's acquisition of Syngenta is a normal business behavior in international investment mergers and acquisitions. The Ministry of Commerce is closely monitoring the progress of the merger.

 

(Source: Beijing Business Daily, "Enterprise Talk" and other reports)

 

 

Foreign Voices: Offers are attractive to group management

 

 

Recently, Swiss German television reported that due to the strength of the US dollar and the severe market environment in the Americas, it is difficult for Syngenta to make a breakthrough in its performance at the beginning of this year. Although its first-quarter turnover (3.74 billion) fell 7 percentage points year-on-year, it was the same as the economist's earlier forecast. In addition, due to the positive impact of the decline in raw material costs on earnings, Syngenta's share price did not fall. But its single-share price is still well below ChemChina's offer of 480 Swiss francs per share. "This offer is very attractive to the group's management, but others, including shareholders, still have doubts," Gyger revealed. Until today, Syngenta shareholders have not made a clear response to ChemChina's acquisition.

 

In addition, the approval of the project by important antitrust regulators represented by the Committee on Foreign Investment in the United States (CFIUS) is another uncertain factor. However, Syngenta executives are optimistic about this. Its CEO John Ramsay said in an interview with Swiss TV: "It is normal to implement these administrative procedures in the early stage of the acquisition. We said that the acquisition will be completed by the end of this year. The project is now progressing well."

 

Ruedi Nützi, president of the School of Economics and Management at the Northwestern University of Applied Sciences and Arts in Switzerland, pointed out that China's political situation will become a factor in Syngenta's management in the future: "In China's provinces, nothing (if you want to do something) is more important than a personal relationship with the party secretary." Christoph Mäder, a member of Syngenta's executive board, disagrees, saying: "The Chinese want to buy a company that has influence on the world market. Therefore, they will be careful not to manage Syngenta in the old-fashioned state-owned enterprise way."

 

Multiwatch, a rights group formed by an alliance of non-governmental organizations, political parties, trade unions and the anti-capitalist movement, recently published a "black booklet" against the Swiss agrochemical company, stringtly listing the problems with its corporate policy.

 

"The group is happy to publicize its contribution to sustainable agriculture and biodiversity, but for the world's largest herbicide manufacturer and third largest seed producer, profit is paramount. The company's operating model has severely affected the lives and health of humans and animals," the Daily Herald quoted the Black Booklet.

 

(Source: Swiss Information Chinese Network (Compiled by Guo Jie))

 

 

Background link: Why Syngenta chose Chemical Group

 

On February 3, 2016, Syngenta announced that China National Chemical Corporation (China National Chemical Corp) offered to buy it for more than $43 billion (about 300 billion yuan) in cash. The acquisition, if successful, would be the largest acquisition of a Western company by a Chinese company to date.

 

 

Since the end of 2014, U.S. seed giant Monsanto and German chemical giant BASF have made takeover offers for Syngenta. Why did Syngenta choose ChemChina?

 

Interface reporter Zhuang Jian analyzed that, first of all, the Chemical Group not only brought new capital to Syngenta, but also opened a convenient door for it to enter China and even Asia, and entered the Asian market at a lower cost. Second, the Chemical Group's existing business footprint does not compete with Syngenta. Finally, the M & A commitments given by the Chemical Group are also very tempting, and Syngenta's development plans, asset portfolio and geographical presence will be retained.

 

 

Meanwhile, the acquisition of Syngenta is not ChemChina's first overseas acquisition. In 2011, the company acquired a 60% stake in Israel's Maxim-Agam Industrial Co., Ltd. (now known as ADAMA Agricultural Solutions Co., Ltd.) for US $2.4 billion, and the company is the seventh largest pesticide manufacturer and distributor in the world. After the acquisition, the company's advantages in a rich product library and mature preparation sales channels have been better utilized. It can be said that through the acquisition of Israeli companies, China National Chemical Corporation has become the world's seventh largest pesticide company in a low-key manner, and has entered the European and American pesticide preparation market more smoothly.

 

Syngenta has stronger core technology advantages in biological breeding and pesticide research and development advantages, or will make up for the chemical group in the field of agricultural basic research.

 

(Source: Interface reporter Zhuang Jian, full text has been deleted)

 

 

Considerations about Genetically Modified

 

 

The top two GM planting areas in the world are corn and soybean; 11 kinds of GM crops are planted in the world, namely corn, soybean, cotton, rape, sugar beet, alfalfa, papaya, pumpkin, potato, poplar and eggplant. Among them, the United States planted 9 species, China planted 3 species (papaya, cotton, poplar).

 

In 2015, GM crops were planted in 28 countries, including 20 developing countries and 8 developed countries, including 60% of the world's population, namely 4 billion. In 2015, the planting area of genetically modified crops in developed countries was 82.6 million hectares, accounting for 46%; the planting area of genetically modified crops in developing countries was 97.1 million hectares, accounting for 54%.

 

From 1996 to 2014, the cumulative economic benefits of genetically modified crops were US $150 billion, of which US $74.1 billion in developed countries and US $76.2 billion in developing countries.

 

In 2015, the planting area of genetically modified crops in China was more than 370 million hectares, including 3.7 million hectares of genetically modified cotton, 7000 hectares of genetically modified papaya, and 543 hectares of Bt poplar. Although China has not yet grown crops such as genetically modified corn, the Chinese government has paid at least US $3 billion to research institutions and domestic companies to develop domestically produced genetically modified seeds, and is currently discussing speeding up the approval of genetically modified crops to be approved.

 

One of the current proposals of the global scientific community is to better combine traditional crop technology (better adapted germplasm) and the best biotechnology (appropriate GM and/or non-GM traits) in a balanced, safe and sustainable way to achieve sustainable increases in crop productivity on 1.5 billion hectares of arable land worldwide.

(Source: The Paper reporter Wang Can Source: ISAAA)