It’s not final yet, but about 400 Minnesota employees of agricultural giant Syngenta — and more than 28,000 worldwide — could be working for a Chinese owner by the end of the year.
China National Chemical Corp., also known as ChemChina, proposed to buy the Switzerland-based seed and pesticide maker in February, and last week U.S. regulators approved the $43 billion deal after reviewing the matter for national security concerns.
Syngenta CEO J. Erik Fyrwald called the approval by the Committee on Foreign Investment in the United States “a big hurdle to clear,” and said that the company will continue to work hard to answer antitrust questions as it seeks European approvals. There is little overlap in the two companies’ products, he said, and both expect the deal to be finalized by the end of the year.
Fyrwald became Syngenta’s CEO in June, and was in Minnesota last week to meet with farmers, employees, contractors and the company’s leadership team in Minnetonka, headquarters for its seed business in North America.
In an interview, Fyrwald said the company’s board will change somewhat if the takeover occurs, but little else will be different.
“Syngenta will stay Syngenta with the same leadership team and the same headquarters,” he said. “There’s no planned integration or head count reduction or change of strategy.”
What will change, Fyrwald said, is that Syngenta will no longer be a publicly owned company, subject to the pressures of “activist shareholders,” some of whom have put short-term profits ahead of critical research and development.
“I’m completely confident that ChemChina and Chinese ownership will be more focused on the long term and allow us to invest aggressively in technology,” Fyrwald said. “They’re not going to stop long-term programs to just make the earnings go up short-term.”
The deal is the latest in several acquisitions by the Chinese company, and has raised eyebrows and provoked concern from some U.S. farm groups and lawmakers.
“It’s clear that China is looking at purchasing companies with food production expertise as part of a long-term strategic plan and a component of their national security,” said Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa. “The fact that a state-owned enterprise may have yet another stake in U.S. agriculture is alarming.”
Grassley also announced a late September hearing on seed and agricultural chemical market consolidation.
National Farmers Union President Roger Johnson called the U.S. approval of the deal “disconcerting for agriculture and our nation’s food security,” and said the decision “fails to acknowledge the significant threats to national security and trade that could result from the acquisition.”
Among other potential problems, Johnson said, China could provide preferential treatment to Syngenta products, which would put other seed and chemical companies at a competitive disadvantage.
Minnesota Farmers Union President Doug Peterson said earlier this year when the deal was announced that it could also trigger additional mergers of remaining seed and crop protection companies and reduce competition, which would hurt family farmers.
Last December, DuPont Co. and Dow Chemical Co. announced plans to merge. And in May, German-based Bayer AG proposed buying Monsanto for $65 billion, though the companies have not yet agreed on a deal. Last year, Monsanto wanted to buy Syngenta for $47 billion, but was turned down and eventually abandoned the effort.
Fyrwald said in the ChemChina deal, Syngenta will not be merging with another agricultural giant, but with a huge financing company that will give it stability and resources. And it will not hurt farmers, he said, because developing more innovations in seeds and chemical products will only help U.S. producers, not hurt them.
“ChemChina is buying us because they want to assure food security and safety for the Chinese people,” he said, “They want to assure that we continue to invest aggressively in innovation both in the seed and crop protection areas, and that we make those innovations available to farmers around the world.”
U.S. farmers will be among the first to benefit, he said, because they are the first to adopt new technology, and the U.S. is an important supply source of grain for the world, including China.
Syngenta is one of the world’s largest producers of insecticides, fungicides, herbicides and seeds and reported sales of $13.4 billion in 2015, about 27 percent of which was in North America. The company’s North American crop protection headquarters is in Greensboro, N.C., and it has research operations in Research Triangle Park.
It also owns the North American Seedcare Institute in Stanton, Minn., about 10 miles east of Northfield. A $20 million expansion of the Seedcare Institute, to be completed next month, will include new research and development labs and a state-of-the-art training facility.