China National Chemical Corp's planned acquisition of the Swiss seed and pesticide company Syngenta AG for about $42.92 billion would help transform ChemChina into the world's biggest supplier of agrochemicals and pesticides, observers said.

ChemChina would acquire Basel-based Syngenta's intellectual property, including its GM crops and high-end agricultural chemical products that it can use in developing new crops and chemical products for the China's agricultural market, the world's largest, said David Abler, professor and agribusiness management program coordinator at Penn State University.

"China has been wary of GM crops for a long time but that seems to be changing, and this acquisition will probably accelerate that change," he added.

Dermot Hayes, agribusiness professor at Iowa State University, said these GM varieties reduce the need to add herbicides and pesticides. "This may be why (ChinaChem) is interested (in Syngenta)," Hayes said.

ChemChina's purchase, unveiled Wednesday, calls for the Chinese company to pay approximately $465 plus a special dividend of nearly $5 for each Syngenta share. Last year Syngenta rejected a takeover offer from US seed giant Monsanto Co.

Syngenta CEO John Ramsay described the ChemChina offer as "very appropriate and attractive", and said that ChemChina had secure financing in place, according to Reuters.

Terms of the deal call for Syngenta to remain based in Switzerland and retain the company's existing management team. Once the transaction is approved by Syngenta shareholders, ChemChina will obtain Syngenta's advanced research and biotechnology for seeds and pesticides. Syngenta will not have to overcome as many hurdles for access to China's agricultural market.

There are two areas of potential pitfalls for the deal - international regulatory reviews by anti-trust officials and the Committee on Foreign Investment in the United States (CFIUS), an interagency group that assesses the national security impact of foreign purchases of a US business.

Syngenta's North American business generated about $3.6 billion in sales in 2015. Its US facilities include a crop-protection manufacturing plant in Louisiana, a crop genetics research facility in North Carolina and a diversified chemical formulating plant in Omaha, Nebraska.

Syngenta Chairman Michael Demare said that his company was not required to file for a CFIUS review but did so in accordance with good corporate governance principles. "There are no major obstacles," he said at a press conference in Basel.

Bloomberg reported that Citigroup analyst Andrew Benson said in a research note, that the ChemChina deal might be the easiest transaction to get by antitrust regulators since a combined ChemChina and Syngenta would only control a 19 percent market share.

Penn State's Abler downplayed any potential problems from a CFIUS review " as long as broader US-Chinese relations continue to be stable".

Laura Fraedrich, an attorney with JonesDay in Washington, said based on her understanding of Syngenta's business CFIUS likely will clear the transaction.

paulwelitzkin@chinadailyusa.com