Syngenta AG and China National Chemical Corp. didn’t submit proposed remedies to resolve potential antitrust concerns related to their planned merger by last Friday’s deadline, an EU official said Monday, raising concerns about how quickly the deal would gain regulatory approval.
Shares in Syngenta were down 7.7% at 389.8 Swiss francs($ 392) around 1050 GMT Monday.
European regulators have set an initial deadline for the merger probe for Oct. 28 to decide whether to clear the deal unconditionally, or open an in-depth investigation, which would last several more months and likely lead the EU to demand concessions from the parties.
“Constructive discussions with the EU are ongoing. Syngenta will issue an update on the progress of the ChemChina transaction with its third -quarter trading statement,” on Tuesday, the company said.
Syngenta has previously said the deal should close by the end of this year. Analysts at Baader Helvea Equity Research said the latest developments shouldn’t derail the deal, though it could be delayed.
“Political intervention actions were always expected by us and therefore we have always stated that the guided closing at the end of 2016 seems ambitious to us,” they said. “However, we do not think that the deal is at risk” and should close in the first half of next year, they said.
In February, Syngenta agreed to be acquired by ChemChina for $ 43 billion in cash. The deal faces regulatory reviews, particularly in regions with large agriculture sectors that include the EU, U.S. and Brazil.
The EU’s review into the Syngenta-ChemChina deal comes as other rivals in the industry also plan to merge.
EU antitrust regulators have opened an in-depth investigation into the proposed merger of Dow Chemical Co.and DuPont Co., which could require the companies to make bigger concessions to clear their blockbuster deal. Meanwhile, Monsanto Co. recently agreed to sell itself to Bayer AG.
While antitrust lawyers have said the deal between Syngenta and ChemChina is fairly complementary and may be less problematic than the other deals, other issues may arise in the EU’s merger review.
The EU is likely to examine whether other Chinese state-owned companies active in the agrochemical sector would have to be grouped in with ChemChina. If considered to be part of a wider group of companies, that could then increase the possibility of ChemChina’s overlaps with Syngenta.
Write to Brian Blackstone at brian.blackstone@wsj.com and Natalia Drozdiak at natalia.drozdiak@wsj.com
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