Syngenta announced on Monday that U.S. regulators have approved the Swiss-based agrochemical company’s proposed mega deal with the state-owned China National Chemical Corporation.
Approval comes from the Committee on Foreign Investment in the United States, which reviews business transactions relevant to national security. The committee’s decision is a key victory for Syngenta and the China National Chemical Corporation — also known as ChemChina — because the two companies need to first move past antitrust concerns in order to finalize their record $43 billion agreement.
Syngenta accepted ChemChina’s all-cash takeover bid in February.
If completed, the deal would be the largest ever foreign takeover by a Chinese company.
News of the U.S. regulatory committee’s decision provided an instant boost to Syngenta shares. Company stock shot upward by more than 11 percent on the New York Stock Exchange shortly following public knowledge of the deal on Monday.
The proposed transaction is expected to close by the end of the year.
Syngenta and ChemChina still need to gain similar approval from “numerous regulators around the world,” the companies said in a joint statement. That task may be complicated, though, by widespread consolidation taking place in the agribusiness and chemicals industries.
Dow Chemical and DuPont reached a $130 billion merger agreement in December. German pharmaceuticals giant Bayer is currently pursuing St. Louis-based Monsanto, which accounts for about a quarter of the global seeds market.
“Both companies are working closely with the regulatory agencies involved and discussions remain constructive,” Syngenta and ChemChina’s joint statement said.
Republican Senator Chuck Grassley from Iowa has urged the Justice Department and Federal Trade Commission to work with the Department of Agriculture when considering proposed mergers in the seed and chemicals industries.
Grassley, who chairs the Senate Judiciary Committee, on Tuesday announced that there will be a hearing held sometime in late September on increasing consolidation.
“The seed and chemical industries are critical to agriculture and the nation’s economy,” Grassley said in a statement. “Iowans are concerned that this sudden consolidation in the industry could cause rising input costs in an already declining agriculture economy.”
ChemChina — which has operations in 150 countries and regions — is among the long list of Chinese interests that have aggressively acquired foreign holdings in recent years. The state-owned company has successfully acquired more than a half-dozen industrial chemical companies in France, the United Kingdom, Israel, Italy and other countries.