Beijing nudged Syngenta to withdraw IPO

Chinese authorities nudged Swiss agrichemicals and seeds group Syngenta to withdraw its application for a long-delayed US$9 billion IPO in Shanghai on concerns about the impact a sizeable new offering would have on a volatile market, reports Reuters.

The Chinese state-owned pesticide giant last Friday withdrew its bid for the initial public offering (IPO) saying the decision was taken "after careful consideration of the industry environment and the company's own development strategy".

Syngenta filed to list on the main board of the Shanghai Stock Exchange May 2023 seeking to raise 65 billion yuan (US$8.98 billion) and passed a review by the bourse's listing committee a month later. Its executives said as recently as November 2023 that Syngenta planned to list in 2024.

The company did not secure a green light from China's securities regulator or top leaders at the State Council, a prerequisite for blockbuster IPOs to go ahead, said the four people familiar with the matter.

The planned flotation finally came unstuck after Syngenta, owned by Sinochem, in March received informal instructions from the China Securities Regulatory Commission (CSRC) to pull its bid for the mega listing.

The reason for Syngenta's IPO withdrawal and the way it was managed, have not been reported previously, underscore how Beijing is prioritizing boosting investor confidence in the secondary market over the launch of new equity offerings.

The government's request for Syngenta to scrap its IPO came despite the company's seeds being essential to food security and China's self-reliance in grain production, which the country's leaders, especially President Xi Jinping, have strongly promoted.

The withdrawal resulted from Chinese authorities' concerns over the potential impact of a sizeable IPO on the frail stock market which had a wretched start to the year, said the four people with knowledge of the matter.

Large IPOs have often been cited by analysts as a reason for triggering the plunge of domestic stock markets, as large amounts of money are frozen when subscriptions are taken, sapping liquidity in the secondary market.

China's stock market rout at the beginning of the year came after mainland shares lagged global stocks for three years and with deflation at levels not seen since the global financial crisis of 2008-09.

 

 

Syngenta ordered to sell US farmland

Arkansas has ordered Syngenta to sell 160 acres (65 hectares) of farmland in the United States state within two years on Tuesday because the company is Chinese-owned, drawing a sharp rebuke from the global seeds producer.

US farm groups and lawmakers are increasingly scrutinizing foreign land ownership due to concerns about national security.

"This is about where your loyalties lie," Arkansas Governor Sarah Huckabee Sanders said at a news conference.

Syngenta said it was disappointed and called the decision a shortsighted action that will hurt Arkansas farmers. The company owns about 1,500 acres (610 hectares) of US agricultural land for research, development and regulatory trials on products used by US farmers, spokesman Saswato Das said.

"Our people in Arkansas are Americans led by Americans who care deeply about serving Arkansas farmers," Das said. The company has owned the site in Craighead County for 35 years, he added.

The order is Arkansas' first enforcement action under a state law passed this year that prohibits certain foreign parties from acquiring or holding land. China is among the prohibited parties because it is subject to US arms export controls known as the International Traffic in Arms Regulations (ITAR), Arkansas Attorney General Tim Griffin said.

A rival of US company Corteva and German firms BASF and Bayer, Swiss agrichemicals and seeds group Syngenta was bought for US$43 billion by ChemChina in 2017 and folded into Sinochem Holdings Corp in 2021. ChemChina is a "state-owned enterprise" in China, Griffin said.

 Syngenta is now pursuing an initial public offering in Shanghai.

If Syngenta fails to sell its land, owned by subsidiary Northrup King Seed Co, Griffin can force them to get out of our state with legal action, Huckabee Sanders said.

The state also fined Syngenta $280,000 for failure to report foreign ownership in a timely manner.

In a form filed with the US Department of Agriculture about the property last year, Syngenta said, "Ultimately, the foreign person that holds indirectly a significant interest in the person owning the land is from China," according to a copy of the document posted by Griffin's office.

But no one from China has ever directed Syngenta executives to buy, lease or otherwise engage in US land acquisitions, Das said.

Since Syngenta had Chinese ownership, the company has purchased an additional 200 agricultural acres (80 hectares), he said.

"All Syngenta land holdings have been examined by the US government, through two administrations, as Syngenta was transitioning to ChemChina ownership," Das said.

Foreign persons held an interest in approximately 40 million acres (16.2 million hectares) of US agricultural land as of December 31, 2021, the USDA said. That was 3.1% of all privately held agricultural land and 1.8% of all land. China had less than 1% of foreign-held land, while Canadian investors had 31%.

 

Syngenta fourth quarter profit falls

Swiss agrichemicals and seeds group Syngenta on Wednesday reported a 25% drop in fourth quarter earnings due to higher raw materials and energy costs.

Syngenta, which plans to list within the next few months, also spent more on reorganizing its business and set cash aside to cover macro-economic uncertainties such as further raw material spikes or potential bad debts by customers.

The Chinese-owned company said its earnings before interest, tax, depreciation and amortization (EBITDA) dropped 25% to US$900 million in the three months to the end of December 2022.

Sales rose 4% to US$7.5 billion boosted by strong growth in its seeds business.

"As previously indicated, farmers accelerated their purchases earlier in the year due to supply concerns, moderating fourth quarter growth," the company said.

"The group continued to maintain higher prices necessary to offset elevated raw material and other costs," it added.

During 2022 Syngenta's sales increased 19% to US$33.4 billion while EBITDA rose 20% to US$5.6 billion.

Much of the growth came from China, where the company added 136 more MAP training and sales centers to take its total to 628 sites.

Syngenta, which competes with US entity Corteva and Germany's BASF and Bayer, was bought in 2017 for US$43 billion by ChemChina, which was folded into Sinochem Holdings Corp in 2021.

The parent company plans to keep a majority stake after its US$10 billion flotation, which is expected to value Syngenta at around US$50 billion.

 

 

Hybrid wheat hitting United States

Global seed maker Syngenta will release a new type of wheat developed with complex cross-breeding techniques in the United States next year, beating out rival companies that are also trying to develop higher yielding wheat at a time of diminishing global grain supplies, reports Reuters.

The hybrid wheat, which combines positive traits from two parent plants, arrives after severe weather slashed grain harvests and the Ukraine war disrupted shipments to hungry importers, sending prices to record highs this spring.

Syngenta, which began working on hybrid wheat in 2010, told Reuters enough seeds will be on the market next year for US farmers to plant about 5,000 to 7,000 acres.

Though a tiny fraction of the nation's plantings, the previously unreported total represents the company's biggest ever release of hybrid wheat. It could open the door for larger seedings in 2024 and beyond, as war and climate change make the world's food supplies increasingly vulnerable.

Growers of corn and other crops like barley have long benefited from hybrid seeds boosting yields. The road to market has been extra slow for wheat because the development process is more costly and difficult, and companies saw lower potential for returns, researchers said.

Benefits of the new crop are still not certain. Three independent seed companies that produced hybrid wheat this year under agreements with Syngenta told Reuters they were unsure the crop will deliver game-changing results for growers. They added that it will take longer to determine how to cost effectively produce the best seeds.

Syngenta's French unit told Reuters the company postponed the launch of a similar type of wheat tested in France following disappointing results. The United States and French hybrids were tailored for local growing conditions, which can include threats from plant diseases and the need to meet quality standards for milling and baking, the company said.

Chinese-owned Syngenta said its US wheat, to be sold under the AgriPro brand, could increase yields by as much as 12% to 15% and make crops more stable, adding that it is attracting strong interest from farmers.

Wheat "is the only major food crop that has not yet benefited from significant technification. Hybrids will change this," said Jon Rich, Syngenta Seeds' head of North America cereals operations.