Syngenta (SYT) Deal Not in Jeopardy from Rumored ChemChina/Sinochem Merger - Deutsche Bank

October 14, 2016 11:22 AM EDT
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In the view of Deutsche Bank analsyt Tim Jones, the rumored ChemChina/Sinochem merger won't jeopardize ChemChina's takeover of Syngenta (NYSE: SYT). Shares of Syngenta declined Friday after chatter about the potential merger surfaced.

"Potentially this is another mega deal in the face of a slow global macro and we believe that if it goes ahead it would lead to some better investment discipline, particularly within China which is currently suffering oversupply in many key product chains. As the group consolidates the long-term competition in some areas of specialties could also increase," said Jones.

Discussing potential for more deal, the analyst continued, "We have met ChemChina several times on our China Chemical Tours and it has always been clear that the group has very strong ambitions to grow through acquisitions. In particular, technology is the key that the group is looking to acquire within several areas of specialty chemicals. Our view remains that once the Syngenta deal closes ChemChina could look at more downstream specialty chemical assets both in the US and Europe. If the group merges with Sinochem the longer-term “fire power” available would be even greater."

Jones added, "Some news reports (BBerg, Reuters) are suggesting that a Syngenta deal may get delayed. We continue to see this as a strange outcome as ChemChina’s proposed acquisition of Syngenta is a major coup for China and we do not think it would want to jeopardise this. We continue to expect this acquisition to complete."

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