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Break Fee for Syngenta Reduced in ChemChina Deal: prospectus

Submitted by Food Democracy Now on March 9, 2016 - 6:18pm

The break fee Swiss group Syngenta (SYNN.S) would have to pay should it back out of an agreed takeover by ChemChina has been cut to $848 million from the $1.5 billion first envisaged, a prospectus for the $43 billion deal published on Tuesday showed.

China made its boldest overseas takeover move yet when state-owned ChemChina agreed last month a cash bid for the Swiss seeds and pesticides group with the aim of improving domestic food production.

Syngenta would have to pay off ChemChina should the Swiss company breach the transaction agreement or back a rival offer, but ChemChina agreed in consultations with the Swiss Takeover Board to reduce the original amount, the Swiss prospectus said.

The $3 billion break fee that ChemChina would pay should the deal not go through remained unchanged.

Bernstein Research said it had clarified language in the prospectus to mean ChemChina would have to pay the $3 billion reverse break fee unless Syngenta has to divest more than $2.68 billion or 20 percent of sales to resolve anti-trust or U.S. regulatory issues, or ChemChina lost control of more than $1.54 billion of sales to resolve CFIUS-related issues.

CFIUS is the Committee on Foreign Investment in the United States, which has to sign off on the deal.

The deal could be terminated in a limited number of circumstances, including by either party if the offer has not become unconditional by June 30, 2017.

The offer is set to commence on March 23 and run until May 23 if not extended, according to the prospectus.

Loans have been lined up to provide full financing for the offer, but all or part of the debt may be replaced by equity funds, the prospectus said.

Other items in the prospectus included:

- ChemChina can squeeze out remaining shareholders against a cash payment if it is tendered 90 percent or more

- If ChemChina clears the 67 percent acceptance threshold but is tendered less than 90 percent, it may carry out a ChemChina-backed capital increase excluding a rights issue to minority shareholders.

(Reporting by Michael Shields in Zurich and Ludwig Burger in Frankfurt; Editing by David Goodman and Susan Thomas)

Originally Published: Reuters

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