US antitrust regulators approved ChemChina's $43 billion takeover of Swiss pesticide and seed giant Syngenta (IOB: 0QOP.IL - news) after they agreed the Chinese company must sell three products, the Federal Trade Commission said.
The deal would mark the largest foreign takeover by a Chinese firm.
Under a preliminary settlement, the FTC said it required the divestitures to address a loss of competition over the herbicide paraquat and two other products in which the merger would have likely led to higher prices for consumers.
The US federal agency said the deal, as originally proposed, created antitrust problems because ChemChina's generics subsidiary ADAMA is either the first- or second-largest generics supplier in the United States for the three products in question.
The other two products are the insecticide abamectin, which protects primarily citrus and tree nut crops, and the fungicide chlorothalonil, which protects peanuts and potatoes.
"Without the proposed divestiture, the merger would eliminate the direct competition that exists today between ChemChina generics subsidiary ADAMA and Syngenta's branded products," the FTC said.
"The merger would also increase the likelihood that US customers buying paraquat, abamectin and chlorothalonil would be forced to pay higher prices or accept reduced service for these products."
The FTC said it worked with its counterparts in Australia, Canada, the European Union, India and Mexico "to analyze the proposed transaction and potential remedies."
The FTC's settlement is subject to public comment for 30 days after which the commission will determine whether to finalize it.
Syngenta said in February it expects the transaction with ChemChina to close in the second quarter.
The deal is just one of several huge takeovers in the agro-chemical sector that regulators are grappling with, with German giant Bayer (IOB: 0P6S.IL - news) offering $66 billion for US firm Monsanto (Hamburg: 1132157.HM - news) , which in 2015 had tried to acquire Syngenta for $46 billion.
Last week, DuPont said it will sell some of its pesticide business to Philadelphia-based chemical company FMC to clear regulatory hurdles.
The European Commission had ruled that the merger could go ahead if DuPont divested "major parts" of its global pesticides business due to antitrust concerns.
In exchange, DuPont will receive the health and nutrition business from FMC along with $1.6 billion in cash and working capital.