According
to CCM’s lately
released newsletter, Herbicides China News
1310, on Sept. 10, 2013, Hubei Sanonda Co., Ltd. (Hubei
Sanonda) announced that Celsius Property B.V. (Celsius) will acquire 148.48
million of its B shares. The acquisition arouses speculation that China
National Chemical Corporation (ChemChina) has begun to restructure its
agrochemical assets, as Celsius is a Dutch company controlled by Makhteshim
Agan Industries Ltd. (Makhteshim Agan), a subsidiary of ChemChina. The purpose
of ChemChina's indirect acquisition of Hubei Sanonda is to strengthen its
control for the company by increasing its shareholdings.
The
148.48 million B shares of Hubei Sanonda to be acquired by ChemChina representing
65% of Hubei Sanonda's B share capital, or 25% of the company's total share
capital. As the practical controlling shareholder, ChemChina's stake in Hubei
Sanonda will rise to around 45.15% from the present 20.15%. This acquisition
will cost approximately USD126.38 million, or USD0.85/share.
Notably,
the acquisition price is much higher than the closing price before the
suspension of Hubei Sanonda's B shares. Since July 30, 2013, Hubei Sanonda's
shares (A shares and B shares) have been suspended because of this acquisition.
The acquisition price is a premium of approximately 26% on the closing price,
and is approaching towards the record high price which is USD0.91/share.
The
announcement also revealed that ChemChina is acquiring Hubei Sanonda in order
to actively implement the globalization plans for its agrochemical business,
and to further strengthen the synergies between the company and its
subsidiaries at home and abroad. Insiders believe that ChemChina is planning to
use Makhteshim Agan as the platform to restructure its agrochemical assets and
business operations.
This
acquisition is likely to be the beginning of ChemChina's agrochemical asset
integration. According to Hubei Sanonda's announcement, ChemChina plans to
follow up on this acquisition by also purchasing Hubei Sanonda's A shares. Makhteshim Agan has not ruled out the
possibility that it will within the next 12 months acquire Hubei Sanonda's A
shares, which are now indirectly held by ChemChina through Celsius or its other
holding subsidiaries. This is in accordance with the strategic arrangement
between ChemChina and Makhteshim Agan.
ChemChina
has had long-held plans to restructure its agrochemical assets. In May 2012,
ChemChina originally planned to restructure its agrochemical assets by using
Hubei Sanonda as a platform. The company intended to inject quality assets into
Hubei Sanonda, including 80.93% equity of Jiangsu Anpon Electrochemical Co.,
Ltd. (Jiangsu Anpon) and 70% equity of Jiangsu Huaihe Chemical Co., Ltd.
(Huaihe Chemical). Both Jiangsu Anpon and Huaihe Chemical are ChemChina's
subsidiaries which operate in the agrochemical sector. However, this plan
eventually failed in Nov. 2012 for various reasons.
ChemChina
is likely to continue to restructure its subsidiaries in the future. This is
because ChemChina has many subsidiaries and many overlapping businesses in its
subsidiaries. Restructuring will help resolve problems such as intra-industry
competition and operational coordination. Up to now, ChemChina's portfolio of
agrochemical enterprises mainly includes Makhteshim Agan, Hubei Sanonda,
Cangzhou Dahua Group Co., Ltd., Jiangsu Anpon, Anhui Petroleum & Chemical
Group Co., Ltd. and Huaihe Chemical.
Hubei Sanonda
performed quite strongly in the first half of 2013, according to Hubei
Sanonda's 2013 semi-annual report. Its operating revenue and net profit both
witnessed a significant increase, growing by 36.08% and 431.43% year-on-year respectively.
The significant growth in net profit was mainly due to the increase in the
output, the sales volume and the sales prices of the company's main products.
The output of the company's chemical pesticides (100% consistency) reached
33,200 tonnes during this period, increasing by 58.79% compared with the same
period of last year. Additionally, the company's export revenue was
approximately USD128 million, representing a year-on-year growth of
34.28%.
FOB
Shanghai of main herbicides in China, Oct. 8, 2013
Shanghai
port prices of main herbicides in China, Oct. 8, 2013
Ex-factory
prices of main herbicides in China, Oct. 8, 2013
Ex-factory
prices of key herbicide raw materials in China, Oct. 8, 2013
Shandong
Qiaochang to be first domestic company producing imazamox
Noposion
to acquire another 20% stock equity of Jiangsu Changlong
Bohan
Chemical to build world's largest production base of oxadiazon technical
Huapont
Nutrichem intends to acquire two chemical companies
Seven
glyphosate companies step into 2012 China Top 20 Pesticide Enterprises
China's
total profit of pesticide industry surges by 40.5% YoY, Jan.-Aug. 2013
Shandong's
total profit of pesticide industry up 44.8% YoY, Jan.-July 2013
MOFCOM
extends anti-dumping investigation period against pyridine
Hubei
Sanonda's export revenue enjoys significant growth, 2013
Paraquat
AS substitutes developed in China
China's
herbicide exports witness growth, Jan.-Aug. 2013
Export
volume of China's acetochlor TC declines sharply, H1 2013
China
newly approves ten herbicide products' formal registrations
MOA
bans three more long residual herbicides
ChemChina
to integrate its agrochemical assets
Herbicides China News, a
monthly publication issued by CCM on 15th, provides you with the
latest occurrences, exclusive analysis on the market trend as well as
professional reviews on competitiveness of companies, products and relative
industries in China’s herbicide industry.
CCM is dedicated to market research in China
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