ChemChina to Integrate Its Pesticide Asset

Hubei Sanonda Co., Ltd. (Hubei Sanonda), a subsidiary of the leading pesticide company in China, ChemChina, released a reorganization plan on 5 May 2012 that ChemChina will inject its two other pesticide subsidiaries into Hubei Sanonda, which is the first step for ChemChina to integrate its numerous pesticide asset. The share price of Hubei Sanonda increased by 10% on 5 May, hitting the daily increase limit, according to CCM’s May issue of AgriChina Investor.

According to the plan released by Hubei Sanonda, it will acquire 80.93% and 70% equities of two other pesticide subsidiaries of ChemChina, namely Jiangsu Anpon Electrochemical Co., Ltd. (Jiangsu Anpon) and Jiangsu Huaihe Chemicals Co., Ltd. (Jiangsu Huaihe), by issuing 131.96 million shares to ChemChina, with the share price of USD0.86/share. Besides, Hubei Sanonda also plans to issue 43.99 million shares to no more than ten particular investors, raising USD37.75 million. The fund raised will be used for the reorganization and to supplement the current funds.

The reorganization plan is not a surprise to domestic investors. There have been rumors that ChemChina planned to integrate its pesticide asset for a long time. ChemChina has taken over some leading pesticide companies in recent years. After gaining 60% stakes of Makhteshim Agan, a leading generic pesticide player in the world, in 2011, ChemChina has become the biggest pesticide company in China and the sixth largest pesticide company in the world.

However, insiders reveal that these companies are operated independently. Though the previous acquisitions haven't achieved the intended target of ChemChina, the integration of these pesticide assets is inevitable.

"The reorganization will benefit the development of the listed company (Hubei Sanonda). It will also increase the profitability and integrate the pesticide business of ChemChina. After the reorganization, the competition among ChemChina's subsidiaries will be reduced. Besides, the asset size of Hubei Sanonda will be greatly enlarged and the risks will be dispersed." According to the reorganization plan released by Hubei Sanonda.

After the reorganization, the sales revenue and product portfolio of Hubei Sanonda will be greatly increased. Hubei Sanonda's sales revenue may exceed USD790 million (RMB5 billion) in 2012 and the company will change from a fertilizer and pesticide company to a company covering raw materials, pesticide intermediates, pesticides and fine chemicals.

The sales revenue and net profit of Jiangsu Anpon are USD277 million and USD8.12 million respectively in 2011. Its business covers chlor-alkali, fine chemicals and pesticides. The major pesticides of Jiangsu Anpon include ethephon and pymetrozine. It is a leading ethephon producer in China and its pymetrozine is very famous in domestic market. The sales revenue and net profit of Jiangsu Huaihe are USD191 million and USD2.41 million respectively in 2011. Its major products are nitrotoluene and 2-toluidine. The sales revenue and net profit of Hubei Sanonda are USD300 million and USD12 million in 2011.

Source: AgriChina Investor 1205

http://www.cnchemicals.com/Newsletter/NewsletterDetail_192.html

Content of AgriChina Investor 1205:

ChemChina to integrate its pesticide asset

Huangshanghuang Food to land on Shenzhen SME Board

Mengniu Dairy to enter Hunan's dairy industry

Tony's Farm: attractive to local governments

China enhances food security by urban modern agriculture

China developing woody oil plants to reduce soybean import

Planting cost increases sharply in 2012

Raw material supply for sugar falls short of its demand

Pilot project of input VAT deduction on processed agricultural products to be launched

Fujian provincial government to support facility agriculture

Draft Proposal on Agricultural Insurance Regulations launched

Promising forestry property right investment in China

……

AgriChina Investor, periodically published on 25^th every month, offers timely update and close follow up of agriculture investment in China, analyzing market data and trends, as well as related policies. Major columns include investment environment, investment dynamics, market watcher, market review etc.

If you are interested in AgriChina Investor, please do not hesitate to contact us by +86-20-37616606, or email us at econtact@cnchemicals.com.

About CCM

CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer. For more information, please visit http://www.cnchemicals.com.

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China

Tel: 86-20-37616606

Email: econtact@cnchemicals.com

Source: http://www.cnchemicals.com/PressRoom/PressRoomDetail_w_1085.html

Main M&A Cases in Pesticide Industry, 2011

After China released the Pesticide Industry Policy on 19 Sept., 2010, pesticide companies' capital operations are more frequent in domestic pesticide industry. Supported by the policy, large pesticide enterprises, especially listed ones with a large amount of capital, launched their expansion by M&A, setting up subsidiaries and IPO, based on CCM’s latest issue of Crop Protection China News.

In this issue, CCM International will list the most influential M&A cases in domestic pesticide industry in 2011.

As M&A has the advantage of relatively low cost and high efficiency, it is considered to be the most important method for companies' expansion. Most international pesticide giants have realized a rapid growth through this kind of expansion, namely external expansion.

In 2011, there were eight main M&A cases that took place in domestic pesticide industry, and most of them happened among listed pesticide companies and non-listed ones.

1. On 6 Jan., 2011, Hebei Veyong Bio-chemical Co., Ltd. (Hebei Veyong), a leading avermectin player in China, announced that its transaction with ENN Energy Holding Limited (ENN Energy), a Chinese energy group listed on Hong Kong Exchanges and Clearing Limited, has been approved by China Securities Regulatory Commission (CSRC).

According to the transaction, Hebei Veyong acquired large equities of ENN Energy's two wholly-owned subsidiaries, namely Xinneng Energy Zhangjiagang Co., Ltd. (Xinneng Zhangjiagang) and Xinneng Energy Bengbu Co., Ltd. (Xinneng Bengbu) to involve in the production and sales of methoxymethane (DME), a kind of raw material of pesticides. 75% equities of Xinneng Zhangjiagang and 100% equities of Xinneng Bengbu are now controlled by Hebei Veyong with the total cost of about USD83.12 million.

2. On 9 Feb., 2011, Shandong Huayang Technology Co., Ltd. (Huayang Technology), a large pesticide company in Shandong Province, revealed that Zibo Hongda Mining Co., Ltd. (Zibo Hongda), a big mining company in Shandong Province, has successfully bid for Huayang Technology's 20.38% equities with capital investment of about USD44.76 million. After the transaction, Zibo Hongda represented Shandong Huayang Pesticide Chemical Industry Group Co., Ltd. (Huayang Group), the biggest shareholder of Huayang Technology, to become the biggest shareholder of Huayang Technology.

3. On 18 Jan., 2011, Shandong Dacheng Pesticide Co., Ltd. (Shandong Dacheng), a listed pesticide company, launched its major assets reorganization. 29.84% of Shandong Dacheng's total equities that was sold to an assignee group, namely Shandong Yinshan Investments Co., Ltd. (Shandong Yinshan), Dongli Town Collective Assets Management Center (Shandong Province) and Huiquan International Investments Co., Ltd. (Huiquan International, Beijing City).

4. On 31 Jan., 2011, Hubei Sanonda Co., Ltd. (Hubei Sanonda), a large listed pesticide company in China, revealed that it will acquire 98% equities of a pyridine player in Hubei Province, namely Jingzhou Hongxiang Chemical Co., Ltd. (Jingzhou Hongxiang), with the total cost of USD5.3 million.

5. On 20 April 2011, Lianhe Chemical Technology Co., Ltd. (Lianhe Technology), a leading pesticide intermediate company in China, purchased 55% equities of Yongheng Chemical Co., Ltd. (Yongheng Chemical), a large chemical intermediate enterprise in Shandong Province, with the total cost of USD10.74 million.

6. In early May 2011, China National Chemical Corporation (ChemChina) obtained the approvals from the Ministry of Commerce and the State Administration of Foreign Exchange for its acquisition of Makhteshim Agan Industries (MAI), an Israeli agrochemical giant.

In this transaction, ChemChina bought 60% equity of MAI (53% holdings of the public and 7% holdings of Koor Industries, the parent company of MAI), with the total cost of USD1.44 billion. In addition, ChemChina arranged a non-recourse loan of USD960 million to Koor through a Chinese bank, using Koor's shares in MAI as collateral, and the loan would be paid in full after seven years.

7. On 24 June 2011, China Agri-Business Inc. (China Agri-Business), a domestic agricultural company listed on NASDAQ in 2007 (Code No.: CHBU.OB), released that it temporarily acquired the management and operation rights of Shaanxi Qinfeng Agrochemical Co., Ltd. (Shaanxi Qinfeng), a large agrochemical player in Shaanxi Province for more than two and a half year, from 1 June 2011 to 31 Dec., 2013.

As a transaction chip, China Agri-Business invested USD185,470 in Shaanxi Qinfeng on 14 June 2011. From 1 Jan., 2012 to 31 Dec., 2013, the company must pay an aggregate of USD370,943 each year to Shaanxi Qinfeng. The capital will be paid in installments of USD185,471 each year.

8. On 31 Aug., 2011, Lianhe Chemical Technology Co., Ltd. (Lianhe Technology) launched its second M&A to purchase 70% equities of Tianyu Chemical Co., Ltd., an intermediate production company in China, with total investment of USD4.52 million.

Source: Crop Protection China News 1201

http://www.cnchemicals.com/Newsletter/NewsletterDetail_16.html

Content of Crop Protection China News 1201:

10% glyphosate SL retreats from Chinese market

Hubei Sanonda predicts net profit in 2011 to up 100%-150%

New policy to better guide foreign investment released

Three pesticide enterprises' production of new products approved by MIIT

Hebei Veyong to relocate pesticide base

Some pesticide companies in Zhejiang approved to enjoy tax break

China may accept amendment of Stockholm Convention

Main M&A cases in pesticide industry, 2011

China's import volume of oil declines in Jan.-Nov., 2011

Crop Protection China News, a semimonthly publication issued by CCM International on 15th and 30th(31st) of every month, aims to gain a deep insight into Chinese market, supply the latest market data and strategy support, analyze the newest legislation and policy and grasp the future market trend.

About CCM

CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.

For more information, please visit http://www.cnchemicals.com.

CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China

Tel: 86-20-37616606

Email: econtact@cnchemicals.com

Source: http://www.cnchemicals.com/PressRoom/PressRoomDetail_w_941.html