China National Chemical agreed to buy Syngenta, a Swiss firm that deals in pesticides and seeds, for more than $43 billion in cash as the state-backed company extends its shopping spree with what would be the biggest acquisition by a Chinese firm.
ChemChina, as the closely held company is known, offered $465 a share in cash, according to a statement Wednesday. The offer, endorsed by Syngenta’s board, is about 20 percent higher than the stock’s last close.
Syngenta shares rose 3.8 percent to 407 Swiss francs ($402) at 3:49 p.m. in Zurich, remaining below the offer price amid concern that the takeover could be delayed by U.S. regulators.
“Political headwinds, in particular from the U.S., could make the takeover process more lengthy than initially expected,” Ute Haibach, analyst at J. Safra Sarasin, wrote in a note. “The Committee for Foreign Investment in the U.S. will likely watch the transaction closely as China’s domestic seed market is broadly closed to U.S. companies.”
If completed, the deal would help Chairman Ren Jianxin transform ChemChina into the world’s biggest supplier of pesticides and agrochemicals, while snatching an asset coveted by St. Louis-based Monsanto. It also underscores the importance that China attaches to owning seed and crop-care technology that can boost agricultural output and help feed the world’s biggest population.
The deal is expected to close by the end of 2016, with a special dividend of 5 Swiss francs a share to be paid if the deal closes. ChemChina plans to keep Syngenta’s management, with Ren chairing a 10-person board that will include four of the existing Syngenta board members.●
— Bloomberg News
General Motors reported record quarterly and annual profits Wednesday, and promised that 2016 will be even better, but unimpressed investors dumped the automaker’s shares.
The disconnect highlights the challenges facing GM, Ford and Fiat Chrysler.
U.S. sales and profits are strong, the Chinese auto market has not fallen off a cliff and European vehicle demand is recovering. Yet shares in the Detroit automakers are not getting any respect, increasing pressure on executives to boost dividends and share buybacks at a time when the costs of new technology and emissions regulations are rising.
GM shares fell as much as 5 percent, even though chief executive Mary Barra and Chief Financial Officer Chuck Stevens told investors on a conference call that any downturn in U.S. auto sales is still several years away. The automaker’s shares closed Wednesday at $28.92, down 2.5 percent for the day and almost 13 percent for the year.
GM earlier Wednesday reported record net income of $9.7 billion for 2015. Profit before interest, taxes and one-time items was $2.8 billion, a fourth-quarter record, ahead of analysts’ expectations.●
● ● Yum Brands, which is spinning off its China business, reported that sales at established restaurants rose more than expected in the fourth quarter, helped by strong sales at KFC China. Yum’s global sales at established restaurants open for more than a year jumped 6 percent in the quarter ended Dec. 26. Sales at established restaurants in China rose 7 percent, with KFC China’s same-store sales increasing 6 percent.
● Wells Fargo said Wednesday that it had agreed to pay $1.2 billion to settle claims that it engaged in mortgage fraud, resolving a major lawsuit brought in the wake of the 2008 financial crisis. The settlement resolves a suit filed in 2012 in federal court in Manhattan accusing Wells Fargo, the country’s largest mortgage lender, of engaging in misconduct in originating and underwriting government-insured mortgages.
● 8:30 a.m. Labor Department releases weekly jobless claims.
● 8:30 a.m. Labor Department releases fourth-quarter productivity data.
● 10 a.m. Freddie Mac releases weekly mortgage rates.
● 10 a.m. Commerce Department releases factory orders for December.
● Before stock market opens: Daimler and Philip Morris International Inc. report earnings.
● After stock market closes: LinkedIn Corp. reports earnings.