China’s biggest ever foreign takeover is taking some heat in the U.S.
State-owned ChemChina last month announced a $43 billion deal to buy Switzerland’s Syngenta, a giant seed and pesticide company. But the planned acquisition has set off alarm bells in the U.S., where Syngenta supplies farmers and runs research and production facilities.
Sen. Chuck Grassley of Iowa, a key farming state, said Wednesday he was worried about how the merger “could impact U.S. food security and distribution, because the food and agriculture sectors are part of the nation’s critical infrastructure.”
The Republican told a local radio station that the deal could create a conflict of interest, with the Chinese government both regulating biotechnology products and owning a company that makes them. Syngenta’s products, which are aimed at helping farmers get more out of their land, include genetically modified seeds for crops like corn, soybeans and sugar beet.
U.S. Secretary of Agriculture Tom Vilsack has already expressed doubts about the deal because of how he says China regulates foreign biotech products.
“I have a watchful eye on all of this and continue to be extremely concerned about the way in which biotechnology and innovation is being treated and impeded by a system in China that often times is not based on science and appears to be more based on politics,” Vilsack said last month.
ChemChina, which was formed 12 years ago out of companies run by a government ministry, didn’t immediately respond to a request for comment Thursday.
The two companies have said they will seek approval for the deal from the Committee on Foreign Investment in the United States, a Treasury-led regulatory body that must sign off on the sale of U.S. firms to foreign investors.
The Syngenta deal is the latest big Chinese acquisition to face objections in the U.S.
Dozens of lawmakers sent a letter to the Committee on Foreign Investment last month calling for a “full and rigorous investigation” into whether a Chinese company that’s planning to buy the Chicago Stock Exchange has a close relationship with China’s government.
And the U.S. technology company Western Digital said a month ago that it was calling off a plan to take a $3.8 billion investment from a Chinese firm because the Treasury committee had decided to investigate the deal.
Chinese companies are in the midst of a global buying frenzy. So far in 2016, they have already announced $104 billion in foreign deals, which is 98% of the amount for the whole of last year, according to Dealogic.