ChemChina — Syngenta Deal Faces New ‘‘‘Food Security‘۝ Concerns in CFIUS Review

Months after announcing the largest potential acquisition by a Chinese company ever, ChemChina‘s $43 billion bid for Syngenta is facing its strongest headwinds yet after Senator Charles Grassley (R — Iowa) openly questioned if the deal could jeopardize U.S. food security and safety.  The Senator focused particular concern over China‘s ability to gain too strong a position in the consolidated seed market. 

Syngenta‘s large market share, an estimated 10% of U.S. soybean seeds and 6% of corn seeds, is reportedly deemed perilous because of China‘s process of reviewing and approving agricultural products like genetically modified seeds which are said to be ‘‘‘out of step with other major countries.‘  U.S. Agriculture Secretary Thomas Vilsak had complained in February testimony about China‘s system for reviewing genetically modified seeds and biotechnology products more broadly, suggesting that it appears to be based more on politics than on science.  He and others also point to Beijing‘s lengthy review process as a cause for delays and supply disruptions.

In addition to his opposition to the acquisition, Sen. Grassley and a bipartisan group of senators are seeking an unprecedented expansion of the Committee on Foreign Investment in the U.S. (CFIUS) to include a more formal review of food security and safety concerns.  The group is seeking a statutory role on the Committee for the Department of Agriculture (USDA) and the Food and Drug Administration (FDA).

Finally, in a less formal, but significant, harbinger of the deal‘s chances of success, investors reportedly do not view it as certain and have not yet ‘‘‘priced it in.‘