Quick Take: ChemChina a Step Closer to Buying Syngenta

(Beijing) — China National Chemical Corp. (ChemChina), the nation’s largest chemicals producer, is one step closer to completing its $44 billion acquisition of smaller Swiss rival Syngenta AG.

In a deal that will be China’s largest-ever overseas acquisition, ChemChina said Wednesday its stake in Syngenta is now at 94.7%, up from 82.2% on May 18, after the Chinese company completed the second round of purchase of shares from Syngenta’s minority shareholders.

In the second round, ChemChina purchased Syngenta shares from shareholders who agreed to the Chinese company’s tender offer after May 4. The Chinese company offered to buy at $465 per ordinary Syngenta share and $93 per American Depositary Share.

ChemChina said earlier it plans to purchase up to 98% of Syngenta shares from the Swiss company’s existing shareholders before delisting it, probably by the end of this month.

ChemChina is relying heavily on external funding to finance this deal. Bank of China, state-owned asset manager China Reform Holdings Corp. Ltd. and China’s Industrial Bank Co. Ltd. provided a combined $18 billion through perpetual bonds. Morgan Stanley provided $2 billion investment through convertible preferred shares. Two consortiums of banks, one led by China Citic Bank and the other by HSBC Bank, provided $12.7 billion and $6.81 billion in loans respectively. ChemChina’s own equity contribution is $5 billion, according to company filings.

Contact reporter Liu Xiao (liuxiao@caixin.com)