WASHINGTON, D.C. — As a regulatory condition of approving the $43 billion merger of one of the world’s largest suppliers of seeds and pesticides – Switzerland’s Syngenta AG – with the China National Chemical Corp. (ChemChina), the Beijing-based conglomerate has agreed to divest itself of its major European pesticide businesses and products that regulate crop growth.

 

The stipulations were set by the European Union and the U.S. Federal Trade Commission (FTC) to avoid competitive harm to the U.S. markets, the regulators said.

 

The multibillion-dollar takeover is one of three proposed agrochemical mergers underway totaling more than $225 billion in combined assets in the world’s agricultural market competing to feed a growing world population. The FTC announcement April 5 came a day after European regulators approved the acquisition on the condition that ChemChina agreed to sell three pesticide businesses that make an herbicide, an insecticide and a fungicide.

 

The state-owned ChemChina deal is the largest foreign takeover yet by China, a move its leaders hope will be a major step to stay ahead of its No. 1 task, feeding its 1.4 billion citizens even as the United States continues to be the world’s biggest food exporter to China.

 

The firm was founded in 1984 and years later took over 100 troubled state-owned chemical factories across the Asian nation to create ChemChina, an extensive agrochemical business empire now ranked 265th among the Fortune Global 500 top companies.

 

“It is important for European farmers and, ultimately, consumers that there will be effective competition in pesticide markets, also after ChemChina’s acquisition of Syngenta,” said Margrethe Vestager, the EU’s antitrust boss, in a statement issued by the EU Commission.

 

“ChemChina has offered significant remedies, which fully address our competitive concerns. This has allowed us to approve the transaction.”

 

Since 2010, ChemChina has undertaken a $60 billion global buying spree acquiring a wide mix of technology and international brands aimed at improving its competitive market share. Among the deals, the giant has picked up the popular Italian tire maker Pirelli, the Norwegian chemical supplier Elkem and the German industrial machinery manufacturer Krauss-Maffei Technologies.

 

In a concession to win its latest approval, ChemChina agreed to sell its pesticides asset, the Israel-based agrochemical subsidiary Adama Agricultural Solution, the manufacturer of crop protection products – the herbicide paraquat, the insecticide abamectin and the fungicide chlorothalonil.

 

Paraquat is mainly used as a burndown herbicide before the growing season; Abamectin is mainly used in citrus and fruit tree crops to kill mites, phyllid and leafminers; and chlorothalonil is mainly used on peanuts and potatoes.

 

Without selling those assets the two companies would have dominated more than 60 percent of the U.S. paraquat market and 80 percent of the abamectin market. Combined, too, the two companies would have had more than 40 percent of the chlorothalonil market.

 

The Tel Aviv Adama, with $3.1 billion in revenue and 4,500 employees, is being sold for an undisclosed amount to the American Vanguard Corp. and its affiliate AMVAC Chemical Corp. – firms that focus on crop protection, turf and ornamental markets and public health applications.

 

The forced sale, the FTC said, was necessary to satisfy anti-monopoly objections because Syngenta also owns branded versions of all three chemicals, while Adama is the No. 1 or 2 supplier of generic versions of the mix in the United States.

 

The FTC said ChemChina has also agreed to sell  significant parts of its European operations in plant growth regulation products. Potential buyers of the assets would likely be from the same industry segment, such as FMC. Corp., Nufarm or Sumitomo Chemical. Syngenta is expected to sell some of its pesticides products marketed under the brand names Acuron, Axial, Beacon and Callisto, where the products are marketed in more than 90 countries. The company declined to address its own divestiture requirements handed down by regulators.

 

In a statement on the merger it said: “The ChemChina-Syngenta transaction will ensure continued choice and ongoing innovation for growers in the USA and around the world.”

 

With the Syngenta acquisition, ChemChina Chair Ren Jianxin said he hopes to expand the Swiss company’s presence throughout China and other emerging markets. Within the past two weeks, the $130 billion Dow-DuPont merger moved a step closer to final approval after agreeing to a $1.6 billion asset swap with pesticide manufacturer FMC Corp. to win approval. The deal is expected to close in August with the EU.

 

DuPont CEO Ed Breen said the FMC deal “satisfies the bulk” of the regulatory remedies to win consideration from governments around the world.

 

The third major global acquisition pending EU and U.S. regulatory approval is the $66 billion deal between American seed seller Monsanto Co. and Germany’s pharmaceutical and agribusiness Bayer AG. If the deal closes, it would pivot the 117,000-employee company in a new direction, farm-targeting businesses in agricultural chemicals, crop products and weed and bug-killing compounds.

 

Syngenta said the EU agreement was a major step toward closing the $43 billion transaction, estimated by the end of the second quarter of 2017.