On Monday, shares of seed and pesticide manufacturer Syngenta Ag-Adr (NYSE:SYT) are rallying, up around 10% in late-morning trading after China National Chemical Corp. (ChemChina)’s bid to acquire the company for $44 billion was approved.
The Committee on Foreign Investment in the United States (CFIUS) approved the transaction, and it is expected to close by the end of this year. This deal will mark the largest ever foreign merger by a Chinese company.
In a joint statement, Syngenta and ChemChina said that “In addition to CFIUS clearance, the closing of the transaction is subject to anti-trust review by numerous regulators around the world and other customary closing conditions. Both companies are working closely with the regulatory agencies involved and discussions remain constructive.”
Since CFIUS has the power to stop any transaction from a foreign investor if it believes it could create security concerns, the approval comes as relief for both Syngenta and ChemChina. Apparently, a group of U.S. senators was previously urging the federal government to dissect the deal, as they feared it would have a negative impact on food security and the U.S. agriculture industry as a whole.
SYNGENTA AG-ADR Price, Consensus and EPS Surprise
SYNGENTA AG-ADR Price, Consensus and EPS Surprise | SYNGENTA AG-ADR Quote
Shares of the Swiss-based company have gained a humble 0.99% year-to-date, underperforming the S&P 500. Investors were worried that the acquisition would fall through, since SYT stock has been trading below the deal’s offer price of $465 per share. ChemChina added a 5 Swiss-Franc special dividend in case the deal failed to make it to the CFIUS.
Syngenta currently sits at a #5 (Strong Sell) on the Zacks Rank.
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