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Syngenta plunges after EU watchdog sparks ChemChina deal doubts

BRUSSELS/ZURICH - Syngenta shares fell more than 9 percent on Monday after the European Commission triggered doubts about Chinese state-owned chemical company ChemChina's $43 billion bid for the Swiss pesticides and seeds group.

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The head office of ChemChina (China National Chemical Corporation) in Beijing. Chemchina and Syngenta haven’t met an EU antitrust deadline to address concerns about their proposed merger. PHOTO: REUTERS

BRUSSELS/ZURICH - Syngenta shares fell more than 9 percent on Monday after the European Commission triggered doubts about Chinese state-owned chemical company ChemChina's $43 billion bid for the Swiss pesticides and seeds group.

Syngenta insisted the deal remained on track after the European Commission said ChemChina had not offered concessions to the EU competition regulator.

They were down 5.9 percent at 397.30 Swiss francs by 1315 GMT, off a session low at 383.50 and well below ChemChina's agreed cash offer of $465 per share, which is worth around 462 Swiss francs at current exchange rates, plus a special dividend of 5 Swiss francs.

The companies met with the EU antitrust authority a week ago in a bid to allay competition concerns about China's largest-ever foreign investment. They had until Oct. 21 to do so.

"No commitments," Commission spokesman Ricardo Cardoso said in an email. This means either the Commission will clear the deal unconditionally by an Oct. 28 deadline or open a full investigation, a process that can take up to five months.

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"We are confident to conclude by year-end," a Syngenta spokesman said. The company had earlier said it would provide an update on the progress of the ChemChina deal with its third-quarter trading statement on Tuesday.

Analysts at Baader Helvea said they viewed the fall as "harsh but understandable," but nevertheless expected the deal to be closed by the first half of next year.

"We think the (Commission) is playing political poker to secure for the EU important points (i.e. GMO-related topics, trade topics, etc.) and therefore the EC tries to increase pressure on ChemChina/China to come up with interesting offers," they said in a note to investors.

While Syngenta's forecast that it would close this year seemed "ambitious," they did not see the deal as being at risk.

"If the worst-worst scenario takes place and the deal fails, we think BASF again would be interested," they added, although any offer from the German group might be below ChemChina's deal. 

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