ChemChina-Syngenta acquisition treading on eggshells as NFU beckons FTC to resist the deal
Category: #world  By Sunil Hebbalkar  Date: 2017-05-05
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ChemChina-Syngenta acquisition treading on eggshells as NFU beckons FTC to resist the deal

The National Farmers Union (NFU) has called upon the Federal Trade Commission (FTC) to oppose the recently proposed acquisition of Syngenta by ChemChina.

ChemChina (China National Chemical Corporations), the Chinese state-owned chemical company specializing in the production of specialty chemicals, agro-based chemicals, and petrochemicals, has proposed to acquire Syngenta AG, the Switzerland agro-based and biotechnology company, for a value exceeding GBP 32 billion. The deal had been proposed in accordance with the recent trend of consolidation in the global agriculture market. This has been evident since the mergers of Bayer with Monsanto and Dow with DuPont. ChemChina’s acquisition of Syngenta AG is the third collaboration of the new wave merger mania in the agricultural market, which has sparked an outbreak of fury among America’s family farmers. Sources reveal that the matter has been brought to the light of the National Farmers Union, the representatives of which have urged the FTC to oppose the deal.

Ironically, according to earlier reports, this acquisition had already received the nod of approval from the European Union and the Federal Trade Commission. Even back then, the civil society groups and the farming fraternity had apparently voiced their concerns that the merger would lead to price escalation for European farmers and reduced market competition. Similar concerns have formed the base of NFU’s complaint against the ChemChina Syngenta deal.

NFU declares that this merger is likely to consolidate the global agriculture sector and cause ambiguity in the international markets, sending a wave of panic among farmers and agricultural workers. Moreover, the last three decades have witnessed the purchase of smaller firms by huge corporations, which has increased the market shares of the latter and significantly reduced the profit margins for family farmers.

Furthermore, since ChemChina is a state-owned Chinese company, the joint corporation of ChemChina and Syngenta will predictably have an edge over its competitors in the Chinese markets, which is bound to create discrepancy for the regional manufacturers. In addition, the Chinese government reportedly provides financial subsidies to domestic companies to make them more competitive than the international enterprises. Pertaining to this fact, the latter apparently receives low-interest loans and debt cancellation subsidies from state-owned banks which has resulted in an unfair situation for Chinese domestic industries.

Subject to these factors, the NFU is standing firm on its decision of boycotting the ChemChina Syngenta merger, reveal sources. The merger is technically aimed at making the market more consolidated and contributing to the regional economy, though the domestic farming industry is likely to suffer a setback. Whether FTC succumbs to the request of the NFU and agrees to reclaim its regulatory approval for the deal is yet to be seen.



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Sunil Hebbalkar

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Sunil Hebbalkar

Sunil Hebbalkar develops content for Algosonline, Market Size Forecasters, and a couple of other platforms. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development departm...

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