Caixin
Aug 16, 2019 03:17 AM
BUSINESS & TECH

Syngenta Is Said to Start Work on World's Biggest Chemical IPO

ChemChina completed its purchase of Syngenta in 2017, a deal that ranks as the biggest-ever overseas acquisition by a Chinese company. Photo:VCG
ChemChina completed its purchase of Syngenta in 2017, a deal that ranks as the biggest-ever overseas acquisition by a Chinese company. Photo:VCG

(Bloomberg) — China National Chemical Corp. (ChemChina) has started gearing up for a listing of Syngenta AG, the Swiss pesticide producer it acquired for $43 billion, in what could become the chemical industry’s biggest-ever initial public offering, people with knowledge of the matter said.

Top executives have begun internal work to prepare for a listing as soon as mid-2020, the people said. Syngenta is speaking with investment banks seeking a role on the deal, the people said, asking not to be identified because the information is private.

The company is likely to seek a listing in Europe, which it prefers over other venues such as Hong Kong or New York, the people said.

ChemChina completed its purchase of Syngenta in 2017, a deal that ranks as the biggest-ever overseas acquisition by a Chinese company. The transaction turned state-owned ChemChina into a global player in agrochemicals while also racking up a massive debt load. The Chinese company said it planned to relist Basel, Switzerland-based Syngenta within four to five years.

“With the expectation that we will IPO by 2022, it’s natural that planning has commenced so that we are prepared to move ahead at the right time, when the market is conducive and we can demonstrate the strong performance necessary to ensure a premium valuation,” Syngenta Chief Financial Officer Mark Patrick said in a statement in response to Bloomberg queries.

No final decisions have been made, and the share sale could still be delayed, the people said. The agricultural chemical industry has been hurting recently, with BASF SE warning last month that 2019 profit will miss its expectations because of slowing demand and the impact of trade conflicts.

The timing of any deal could also be affected by the Chinese government’s long-discussed megamerger between ChemChina and state-owned rival Sinochem Group, the people said. A spokeswoman for ChemChina didn’t immediately respond to a text message and email seeking comment.

Senior officials at ChemChina and Sinochem have completed preparatory work for the merger, which would reshape the industry and create an oil-to-chemicals company with more than $100 billion in assets, Bloomberg News reported in December. Frank Ning, who leads both companies, has been studying potential asset sales after Chinese authorities granted preliminary approval for the combination, people with knowledge of the matter said.

While Syngenta hasn’t set a precise fundraising target, major European exchanges usually require a 20% to 25% stake to be sold to public investors. Based on that, the deal would easily surpass Petronas Chemicals Group Bhd.’s $4.8 billion IPO in 2010 as the biggest-ever from the chemical industry, according to data compiled by Bloomberg. Chinese regulations prevent state-owned enterprises that are listing units from accepting valuations lower than what they paid for the assets.

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