antao Posted January 4, 2017 Share Posted January 4, 2017 Hi all, anyone looking at the Syngenta / ChemChina merger? Currently spread sits at 23% (incl. a chf 5 special dividend upon closing), although major regulatory hurdles have been overcome and financing is secured. EU regulatory decision scheduled to April 12. Link to comment Share on other sites More sharing options...
kirkomi Posted January 4, 2017 Share Posted January 4, 2017 If the deal falls through, I do not want to own this company at these prices. Too expensive for my taste. I am going to pass. But, if you feel that the deal will definitely close, it is easy money. Link to comment Share on other sites More sharing options...
tombgrt Posted January 4, 2017 Share Posted January 4, 2017 That is the whole point and one I made a year ago elsewhere regarding Syngenta: it's very unlikely the market is so inefficient you can buy this "done deal" at a 20% discount, especially not for these mega caps. More likely the market knows something and that this ultimately doesnt pass. Link to comment Share on other sites More sharing options...
antao Posted January 5, 2017 Author Share Posted January 5, 2017 We have decided not to open a position. Our "no deal" valuation for SYT is around $65 per share, which means this trade is very close to a 1:1 risk/reward. Not worth the risk. Link to comment Share on other sites More sharing options...
rb Posted January 6, 2017 Share Posted January 6, 2017 Interesting. There's a large spread on Monsanto merger as well. I guess there's a real fear out there that the EU would step on these mergers since the US already approved Syngenta. My thoughts are that is the EU blocks Syngenta then China would retaliate in some way. But then the EU is quite strict when it comes food and competition. Link to comment Share on other sites More sharing options...
antao Posted January 6, 2017 Author Share Posted January 6, 2017 Interesting. There's a large spread on Monsanto merger as well. I guess there's a real fear out there that the EU would step on these mergers since the US already approved Syngenta. My thoughts are that is the EU blocks Syngenta then China would retaliate in some way. But then the EU is quite strict when it comes food and competition. Maybe it has something to do with this? https://www.ft.com/content/f1b3e52e-99b0-11e6-8f9b-70e3cabccfae Link to comment Share on other sites More sharing options...
rb Posted January 6, 2017 Share Posted January 6, 2017 Interesting. There's a large spread on Monsanto merger as well. I guess there's a real fear out there that the EU would step on these mergers since the US already approved Syngenta. My thoughts are that is the EU blocks Syngenta then China would retaliate in some way. But then the EU is quite strict when it comes food and competition. Maybe it has something to do with this? https://www.ft.com/content/f1b3e52e-99b0-11e6-8f9b-70e3cabccfae That probably doesn't help. But since the discount on MON is similar I'm inclined to think it's probably something else. Link to comment Share on other sites More sharing options...
writser Posted April 10, 2017 Share Posted April 10, 2017 Syngenta now has FTC, CFIUS approval & EU approval (and Mexican approval, FWIW). Sure, some things can still go wrong but the big boys think the deal is fine. As far as I know Syngenta is still guiding towards a q2 closing. Though granted, they were optimistic last year too about a quick close. Nevertheless I think the current 5% spread is too large given the regulatory approvals so far and bought a couple of shares. We'll see how things work out. Second large-cap Swiss merger I'm involved in this year (first one). Wondering why spreads were so large in both cases (though the Actelion spread has narrowed quite a bit). Possible explanations: - I underestimate deal risk. - Limited capacity in market to absorb large international merger arbs (though seems unlikely to me). - Downside is supposedly large if deal is cancelled, should be reflected in spread. - (Ungrounded?) fear of Chinese counterparty. - Combination of psychological factors: deal has been pushed back multiple times, fear of further regulatory issues. - Combination of the above. Not sure. Link to comment Share on other sites More sharing options...
ccplz Posted April 11, 2017 Share Posted April 11, 2017 Syngenta now has FTC, CFIUS approval & EU approval (and Mexican approval, FWIW). Sure, some things can still go wrong but the big boys think the deal is fine. As far as I know Syngenta is still guiding towards a q2 closing. Though granted, they were optimistic last year too about a quick close. Nevertheless I think the current 5% spread is too large given the regulatory approvals so far and bought a couple of shares. We'll see how things work out. Second large-cap Swiss merger I'm involved in this year (first one). Wondering why spreads were so large in both cases (though the Actelion spread has narrowed quite a bit). Possible explanations: - I underestimate deal risk. - Limited capacity in market to absorb large international merger arbs (though seems unlikely to me). - Downside is supposedly large if deal is cancelled, should be reflected in spread. - (Ungrounded?) fear of Chinese counterparty. - Combination of psychological factors: deal has been pushed back multiple times, fear of further regulatory issues. - Combination of the above. Not sure. How did you get 5%? At the current price (451.3), the spread is only 3% isn't it? Link to comment Share on other sites More sharing options...
writser Posted April 11, 2017 Share Posted April 11, 2017 465 USD is ~469 CHF and a 5 CHF special dividend (conditional upon closing) for a ~474 CHF total consideration. Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted April 11, 2017 Share Posted April 11, 2017 465 USD is ~469 CHF and a 5 CHF special dividend (conditional upon closing) for a ~474 CHF total consideration. That is the offer for the share traded on the Swiss exchange. Holders of the US SYT ADRs are receiving $93 in cash. Link to comment Share on other sites More sharing options...
maybe4less Posted April 11, 2017 Share Posted April 11, 2017 465 USD is ~469 CHF and a 5 CHF special dividend (conditional upon closing) for a ~474 CHF total consideration. That is the offer for the share traded on the Swiss exchange. Holders of the US SYT ADRs are receiving $93 in cash. Plus a $1 /share dividend less 5 cents ADR fee Link to comment Share on other sites More sharing options...
writser Posted April 26, 2017 Share Posted April 26, 2017 Looks like everything is going according to the (multiple times revised) plan. Spread now down to ~1%. Decent return in two tweeks (still holding though). ChemChina press release: In response to speculation in the market, ChemChina today reconfirmed on behalf of the Offeror that all regulatory approvals and conditions required for the closing of the offers have been obtained or satisfied. Subject to at least 67% of Syngenta’s issued shares and ADSs being validly tendered into the offers and not withdrawn as of May 4, 2017, the Offeror will purchase and pay for all such shares and ADSs at the first settlement on May 18, 2017. Link to comment Share on other sites More sharing options...
rjstc Posted April 28, 2017 Share Posted April 28, 2017 Question? Is there any withholding if you don"t tender shares? How might that affect things? Link to comment Share on other sites More sharing options...
Hielko Posted April 28, 2017 Share Posted April 28, 2017 Question? Is there any withholding if you don"t tender shares? How might that affect things? Not tendering might have negative tax consequences, would be pretty stupid not to do it. Link to comment Share on other sites More sharing options...
writser Posted May 18, 2017 Share Posted May 18, 2017 My tendered shares have been cashed out. This was a nice opportunity after regulators approved the deal. Depending on what line you bought and whether you hedged currency movements had a big impact. When I bought EV of the deal package was ~474 CHF, now only ~460 CHF. In the long run I'm indifferent about that though. For comparison, since I bought the ADR is up from $89.68 to $92.81. Holders also received a $1 dividend for a 4.6% return in five weeks. Not bad. Maybe my position should have been a little larger. With these large deals I'm sometimes a bit skeptical about my 'edge' on the market but maybe I'm giving it too much credit. Link to comment Share on other sites More sharing options...
Hielko Posted May 18, 2017 Share Posted May 18, 2017 I bought the ADR (since I figured $0.05 in ADR fees would be a better deal than higher transaction costs in Switzerland), expect to receive the cash later today :) This one turned out quite nicely, although it's hard to say if it was a good bet or that the market was correctly recognizing and pricing some small tails risks that didn't materialize. Link to comment Share on other sites More sharing options...
AtlCDore Posted May 19, 2017 Share Posted May 19, 2017 Any reason why the put options are priced where they are? If this deal is going to get done, why would someone be a buyer of the puts? Thanks, AtlCDore Link to comment Share on other sites More sharing options...
writser Posted August 15, 2019 Share Posted August 15, 2019 https://www.bloomberg.com/news/articles/2019-08-15/syngenta-is-said-to-start-work-on-world-s-biggest-chemical-ipo According to Bloomberg ChemChina wants to relist Syngenta in Europe as soon as 2020. Full circle. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now