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For months now, Swiss seed maker Syngenta AG has been publicly courted by the likes of Monsanto Co. and China National Chemical Corp., part of a historic consolidation wave sweeping the agri-chemicals business.
But lurking behind any deal are lawsuits against Syngenta in which U.S. farmers and grain handlers are claiming losses of up to $6 billion. The suits in federal and state courts accuse Syngenta, the world’s third-largest seed company, of putting growers at risk by selling a genetically modified corn seed, engineered to fend off insects, without first obtaining Chinese import approval. Officials there rejected the grain in 2013, pushing down its price and crimping sales for farmers, plaintiffs say.
While damage estimates are often inflated as a negotiating tactic, even the risk of a sizable award, covering tens of thousands of farmers, could erode Syngenta’s value in merger negotiations, analysts say. A group of Syngenta shareholders last month called for more disclosure of legal liabilities “that could have a substantial impact on the company’s value.” . . .
The litigation is expected to drag into next year, with the first of six so-called bellwether cases scheduled for June 2017. It won’t be an easy suit to win because Syngenta had U.S. approval for the seed, said Kristine A. Tidgren, staff attorney at Iowa State University’s Center for Agricultural Law and Taxation.
“Any company that is going to buy Syngenta is going to have weighed the risks,” she said.
Read full, original post: Red-Hot M&A Target Comes With a Little Legal Problem in the U.S.