ChemChina-Syngenta deal comes under increased scrutiny with USDA joining the review panel

With this deal China is looking for a strategic hold on global food supplies.

As per multiple sources familiar with the matter at hand, the U.S. Department of Agriculture is set to join the U.S. government panel that is in the process of reviewing ChemChina’s planned $43 billion acquisition of Syngenta AG.

This move will prompt increased government scrutiny for this deal. The U.S. Department of Agriculture came into the picture after lawmakers wrote to Treasury Secretary Jacob Lew, earlier this year in March, asking for the USDA’s involvement since the impact of the deal could be better assessed as it has the potential to impact domestic food security.

Currently, Lew chairs the Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security threats. The committee comprises of representatives from 16 U.S. agencies including Treasury, Homeland Security and Defense.

Sources have preferred the cover of anonymity since the involvement of USDA in CFIUS has not been earlier publicly disclosed.

When asked to respond to requests for comments, a spokesman for the Treasury said, “By law, information filed with CFIUS may not be disclosed by CFIUS to the public. Accordingly, the department does not comment on information relating to specific CFIUS cases, including whether or not certain parties have filed notices for review.”

A spokeswoman for USDA also declined to comment, citing the same reasons. Syngenta too declined to comment. A spokesman for China’s National Chemical Corp, ChemChina, did not immediately respond to a request for comment.

Although the USDA is not one of the agencies comprising CFIUS, there are quite a few legal precedents which support its stand of joining the review panel. Case in point: in 2013, China’s Shuanghui International Holdings Ltd.’s acquisition of Smithfield Foods Inc, a U.S. meat processing company, was approved with CFIUS and the USDA’s participation.

Earlier this year, Syngenta had said it would voluntarily make a filing with CFIUS regarding this deal “even though no obvious national security concerns were identified during due diligence.”

Announced this February, this ChemChina-Syngenta deal is the largest ever acquisition made by a Chinese company. For China, this deal is of strategic value, since it could potentially secure its food supplies for its burgeoning population.

Headquarterred in North Carolina, Syngenta generates almost a quarter of its revenues from North America. It is the biggest seller of pesticides in the continent and is a key player in seeds.

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy


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