The state-owned China National Chemical Corporation (ChemChina) has started preparations for a US national security review of its plans to buy Swiss seeds and pesticide maker Syngenta after the chairman of the US House Committee on Agriculture said he would track the progress of the takeover bid.

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US House Committee Chairman Michael Conaway, a Republican from Texas, is aware of the transaction, and has said that he "will be closely monitoring this as it develops," a spokesperson for the committee said in an-email to Reuters.

Conaway also serves on the Permanent Select Committee on Intelligence and the US House Armed Services Committee.  

The Texas lawmaker once gathered support for a bill for an additional carrier for the US Navy by saying, among others, "China represents a continual threat to maritime stability in the South China Seas."

Food Security

ChemChina and Syngenta announced the $43 billion transaction on Wednesday.  The landmark deal -- which many see as China's boldest overseas corporate takeover move -- underscores Beijing's efforts to ensure sufficient food for the country's 1.4-billion-strong population.

"This is more than just a company buying another," a source close to the deal told Reuters.  "This is a government attempting to address a real problem."

Syngenta generates a quarter of its revenues from North America, and commands a majority of the continent's market on pesticides.  It is also a major player in the North American market for seeds.

Many US agencies regard food supply as critical infrastructure, which is why experts say ChemChina's offer to acquire Syngenta is likely to undergo close scrutiny from the US House Committee on Foreign Investments in the US (CFIUS), a powerful national security watchdog. 

CFIUS is headed by the US Department of the Treasury, and includes the Department of Homeland Security and the US Department of Defense.  The committee reviews acquisitions of US businesses by foreign investors and can recommend the president to block any transactions that it deems compromising to national security.

Due Diligence

The committee stunned the international business community last month when it blocked a $3.3 billion sale of Dutch company Philips' lighting unit to a consortium of Asian buyers. Four years ago, the committee stopped Chinese-owned Ralls Corporation from building a wind farm near a naval base in Oregon.

Experts familiar with the panel's national security reviews say CFIUS will likely scrutinize the proposed takeover to determine whether it would compromise US food security, and whether the company's combined locations would be too close to US military bases.

Bloomberg reports that Syngenta has a crop protection manufacturing facility in Louisiana, a crop genetics research facility in North Carolina, and a diversified chemical formulating facility in Nebraska.  The agrochemical company likewise has a presence in California, Delaware, Iowa and Minnesota, among others.

Syngenta chief operating officer Davor Pisk said the company performs no classified work for the US government and none of its facilities appear to be near US military bases.  

"As is best practice in foreign acquisitions involving US businesses, the parties will make a voluntary filing with CFIUS, even though no obvious national security concerns were identified during due diligence," Pisk said in an e-mail to Reuters.  

TagsUS-China relations, food security, ChemChina