Federal regulators might have green-lighted the $44 billion acquisition of Syngenta AG (SYT) by China National Chemical Corp., but Syngenta still has unsettled business to tend to. Notably, its rocky relationship with farmers.
According to a recent court filing, a U.S. district court judge in Kansas ruled that the numerous lawsuits brought against Syngenta by U.S. farmers over sales of biotech corn seeds not approved for import by China, merit class action status. (See also: ChemChina Bid for Syngenta Wins Key U.S. Approval.)
“Syngenta respectfully disagrees with this ruling, particularly given the widely varying ways in which farmers grow and sell corn in different markets across the U.S.,” Syngenta spokesman Paul Minehart said, according to Reuters.
The ruling on Tuesday comes two years after farmers from the largest U.S. corn-producing states sued Syngenta because China rejected grain shipments that contained traces of Syngenta’s Agrisure Viptera corn.
China rejected the shipments because the Viptera corn grains had not been approved for import. As a result of the rejected shipments which began in 2013, farmers complained of loss of revenue and an erosion in corn prices. According to court documents, attorneys for the plaintiffs estimate the losses to be between $5 billion to $7 billion in current and future profits.
The states joining the class action suit include Arkansas, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio and South Dakota. “The Court’s ruling will make it easier and less expensive for farmers to pursue their claims against Syngenta,” said Scott Powell of Hare Wynn Newell & Newton, one of the attorneys appointed by the court to represent the class, reported Reuters.
Syngenta has denied any wrongdoing and said it will consider an appeal of the District Court’s decision. The company insists that it acted responsibly, asserting that the launch of Viptera corn was conducted in full compliance with all regulatory and legal requirements. (See also: Syngenta May Seek Tie-Up After Monsanto Withdrawal.)
Syngenta shares closed Wednesday at $88.35, up 0.60%. The shares have risen 12% year-to-date and 40% over the past 12 months, compared with a 6.23% year-to-date rise in the S&P 500 (SPX) index.
Source: www.investopedia.com
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