Sinochem Acquires Israel's Largest Agrochemical Company
Although China National Chemical Corporation is struggling to acquire Canada Potash Corp., the recent acquisitions show that its strategy for overseas acquisitions is increasingly flexible and the strategic layout is being shaped.
Sinochem recently confirmed that it will acquire a 60% controlling stake in Israel's agrichemical company Maxim Agan (MA Industries) for US$1.44 billion, which will bring the value of MA Industries to US$2.4 billion. MA Industries is the world's sixth largest producer of agrochemical products.
In addition, Sinochem will also provide a loan of US$960 million to Ko Industries, the parent company of MA Industries, and the latter will guarantee the remaining equity in MA Industries.
China National Chemical Industry Group is the largest agricultural chemical company in China. At present, the total assets and sales revenue of Sinochem Group exceed 100 billion yuan (about 15.2 billion US dollars).
This is Sinochem's largest overseas acquisition deal since it launched its overseas acquisition strategy in 2005. It is also China's largest acquisition in the field of agricultural chemicals to date.
“The industry concentration of the global pesticide industry will further increase.†Chang Yingzhi, a research fellow of China Investment Advisor Chemical Industry, told the reporter that “At the same time, Sinochem has more easily introduced overseas strategic investment, which is very important for the future capital operation of its agricultural sector. favorable."
Jackie Eldan, Israel’s Consul General in Shanghai, told reporters, “The acquisition shows that more and more Chinese companies will use their “financial anchors†to participate in strategic acquisitions.â€
In the global financial crisis, Ko Industries, the parent company of MA Industries, was relatively affected. In the third quarter of last year, it suffered significant losses and had to sell its assets. This is why a special “financial anchor†arrangement has emerged in this acquisition: In addition to paying conventional US$1.44 billion in acquisitions, Sinochem also provided Koor Industries with a loan of US$960 million. The remaining owner of the remaining MA Industries shares guarantee.
Sixty percent of Israel’s agrichemical giant’s control The acquisition is expected to be completed in the second quarter or third quarter of this year.
MA Industries, the world's sixth largest pesticide manufacturer, specializes in the development and production of pesticides and herbicides. It is listed on the Tel Aviv Stock Exchange in Israel.
The parent company of MA Industries is Koor Industries, which owns 46.55% of the company's shares and 47.02% of the voting rights. In addition to MA Industries, Koor Industries also owns a 3.24 percent stake in Credit Suisse, and is involved in real estate, telecommunications, asset management and venture capital operations. As of September 30, 2010, Koor Industries’ total assets were 10.7 billion shekels (approximately US$3 billion).
The ultimate controlling party of Koor Industries is Israel’s largest corporate group, the IDB Group.
In October last year, news of the two sides negotiated. It was rumored at the time that Sinochem planned to acquire 70% of the shares of MA.
In early January of this year, Sinochem and Koor Industries signed a contract for the acquisition of a controlling stake in MA Industries.
The contract stipulates that Sinochem will purchase 53% of MA Industries in the open market for 1.272 billion U.S. dollars, and purchase 7% of its 7% stake in Koor Industries for 168 million U.S. dollars. About $ 5.57 per share (about 20 shekels).
After the completion of the acquisition, MA Industries will become a joint venture between Sinochem and Israel Koor Industries, which will account for 60% and 40% respectively.
In addition, Sinochem will provide Koor Industries with a US$960 million seven-year non-recourse loan, and the latter’s share in MA Industries will be used as a guarantee.
Therefore, the total amount paid by Sinochem in this acquisition will reach the total value of $2,400 million from MA Industries.
Upon completion of the acquisition, MA Industries will withdraw from the market.
The acquisition is expected to be completed in the second quarter or third quarter of this year. After the acquisition is completed, Sinochem Group will have the right to select the chairman of the MA company. The company’s new chairman, Ami Erel, just took office on January 1 this year.
"Acquisition + Loan" Financial Arrangements IDB Group reserves its shares in order to meet the strategic development needs in China.
According to the financial report of MA Industries in the third quarter of last year, its revenue in the first nine months was approximately US$1.86 billion and net income was US$27 million.
Sinochem's purchase price of 20 shekels per share is about a quarter higher than that of the current MA Industries company.
Previously, both parties reported that during the negotiations, the agreed purchase price would make the company's valuation reach 2.7 billion US dollars. Koor Industries’s board of directors stated last year that Sinochem may eventually acquire a 70% stake in MA.
Although slightly lower than the expected purchase of shares, this is still the largest merger of Chinese companies in Israel so far.
The additional $960 million in loans indicates that Sinochem has the ability to fully acquire MA Industries, but it chose a more flexible approach.
According to the agreement, Koor Industries may choose to repay the loan in cash after the expiration of the 7-year loan period, and may also use the pledged equity as the repayment.
Oren Rozenblat, Israel's deputy consul general in Shanghai, said that because Israel may reduce its current 24% corporate income tax to 18% in the future, Koor Industries is likely to hope to delay the acquisition of all the shares of MA Industries by obtaining a loan. Income, in order to reduce the income tax it may have to pay in the moment.
Due to a large loss of 367 million shekels (about $95 million) in the third quarter of last year, Koor Industries lost a total of $49 million in shekels (approximately $14 million) before the first nine months of the year.
Facts have proven that Sinochem is viable even if it initiates a comprehensive purchase of MA Industries. However, IDB Group believes it is necessary to maintain Koor Industries’ equity in MA to meet IDB's strategic development needs in China.
Nochi Dankner, chairman of IDB Holdings Ltd., believes that "this acquisition will open the door for more transactions in China in the future."
However, the deal also caused dissatisfaction among public investors. They believe that Koor Industries directly enjoyed the loan facilities provided by Sinochem Corporation. In fact, this loan should be regarded as the income of all shareholders of MA Industries and be evenly distributed. As of press time, the dispute has not yet been resolved.
Layout of overseas agrochemical markets Following the footsteps of multinational companies in Europe and the United States, Chinese state-owned companies have joined the ranks of Israeli companies that have acquired new products for R&D.
In recent years, Sinochem has been accelerating the consolidation and restructuring of the agrochemical sector. This is another big step in the overseas market after Sinochem acquired the silicone business of Adisseo, Keyos, and Rhodia.
Chang Zhizhi stated: "This acquisition will not only expand Sinochem's production capacity and introduce advanced pesticide production technology, but also the global sales network of MA Industries will help Sinochem International expand its business."
MA has sales channels in more than 100 countries around the world. Its main production base is in Israel and Brazil, while it has a mature sales network in Colombia, Greece and Spain. The company has also recently expanded its market in North America and Asia.
Chang Yongzhi believes: "MA's business and Sinochem have certain synergies."
MA Industries' product line includes insecticides, fungicides, acaricides, herbicides, and plant growth regulators. At the same time, the company is also involved in the development and production of fine chemicals, industrial chemicals and fluorescent agents, antioxidants, nutrients and health care products. This helps China Chemicals to enrich its agrochemical product line.
According to another analysis, Sinochem hopes that through this acquisition, it will integrate its agricultural chemical sector and become bigger and stronger. This is obviously positive for the three listed agrochemical companies controlled by the company, and does not rule out China Chemical Industry's agrochemical group. The consolidation of the plate companies may be possible.
The acquisition of Israeli companies developing new products has always been the practice of multinational companies in Europe and the United States, and now China's central enterprises have also joined the ranks.
Israel’s Consul General Ayjak expressed hope that Sinochem will still leave MA’s R&D center in Israel and give full play to its technical advantages.
Sinochem recently confirmed that it will acquire a 60% controlling stake in Israel's agrichemical company Maxim Agan (MA Industries) for US$1.44 billion, which will bring the value of MA Industries to US$2.4 billion. MA Industries is the world's sixth largest producer of agrochemical products.
In addition, Sinochem will also provide a loan of US$960 million to Ko Industries, the parent company of MA Industries, and the latter will guarantee the remaining equity in MA Industries.
China National Chemical Industry Group is the largest agricultural chemical company in China. At present, the total assets and sales revenue of Sinochem Group exceed 100 billion yuan (about 15.2 billion US dollars).
This is Sinochem's largest overseas acquisition deal since it launched its overseas acquisition strategy in 2005. It is also China's largest acquisition in the field of agricultural chemicals to date.
“The industry concentration of the global pesticide industry will further increase.†Chang Yingzhi, a research fellow of China Investment Advisor Chemical Industry, told the reporter that “At the same time, Sinochem has more easily introduced overseas strategic investment, which is very important for the future capital operation of its agricultural sector. favorable."
Jackie Eldan, Israel’s Consul General in Shanghai, told reporters, “The acquisition shows that more and more Chinese companies will use their “financial anchors†to participate in strategic acquisitions.â€
In the global financial crisis, Ko Industries, the parent company of MA Industries, was relatively affected. In the third quarter of last year, it suffered significant losses and had to sell its assets. This is why a special “financial anchor†arrangement has emerged in this acquisition: In addition to paying conventional US$1.44 billion in acquisitions, Sinochem also provided Koor Industries with a loan of US$960 million. The remaining owner of the remaining MA Industries shares guarantee.
Sixty percent of Israel’s agrichemical giant’s control The acquisition is expected to be completed in the second quarter or third quarter of this year.
MA Industries, the world's sixth largest pesticide manufacturer, specializes in the development and production of pesticides and herbicides. It is listed on the Tel Aviv Stock Exchange in Israel.
The parent company of MA Industries is Koor Industries, which owns 46.55% of the company's shares and 47.02% of the voting rights. In addition to MA Industries, Koor Industries also owns a 3.24 percent stake in Credit Suisse, and is involved in real estate, telecommunications, asset management and venture capital operations. As of September 30, 2010, Koor Industries’ total assets were 10.7 billion shekels (approximately US$3 billion).
The ultimate controlling party of Koor Industries is Israel’s largest corporate group, the IDB Group.
In October last year, news of the two sides negotiated. It was rumored at the time that Sinochem planned to acquire 70% of the shares of MA.
In early January of this year, Sinochem and Koor Industries signed a contract for the acquisition of a controlling stake in MA Industries.
The contract stipulates that Sinochem will purchase 53% of MA Industries in the open market for 1.272 billion U.S. dollars, and purchase 7% of its 7% stake in Koor Industries for 168 million U.S. dollars. About $ 5.57 per share (about 20 shekels).
After the completion of the acquisition, MA Industries will become a joint venture between Sinochem and Israel Koor Industries, which will account for 60% and 40% respectively.
In addition, Sinochem will provide Koor Industries with a US$960 million seven-year non-recourse loan, and the latter’s share in MA Industries will be used as a guarantee.
Therefore, the total amount paid by Sinochem in this acquisition will reach the total value of $2,400 million from MA Industries.
Upon completion of the acquisition, MA Industries will withdraw from the market.
The acquisition is expected to be completed in the second quarter or third quarter of this year. After the acquisition is completed, Sinochem Group will have the right to select the chairman of the MA company. The company’s new chairman, Ami Erel, just took office on January 1 this year.
"Acquisition + Loan" Financial Arrangements IDB Group reserves its shares in order to meet the strategic development needs in China.
According to the financial report of MA Industries in the third quarter of last year, its revenue in the first nine months was approximately US$1.86 billion and net income was US$27 million.
Sinochem's purchase price of 20 shekels per share is about a quarter higher than that of the current MA Industries company.
Previously, both parties reported that during the negotiations, the agreed purchase price would make the company's valuation reach 2.7 billion US dollars. Koor Industries’s board of directors stated last year that Sinochem may eventually acquire a 70% stake in MA.
Although slightly lower than the expected purchase of shares, this is still the largest merger of Chinese companies in Israel so far.
The additional $960 million in loans indicates that Sinochem has the ability to fully acquire MA Industries, but it chose a more flexible approach.
According to the agreement, Koor Industries may choose to repay the loan in cash after the expiration of the 7-year loan period, and may also use the pledged equity as the repayment.
Oren Rozenblat, Israel's deputy consul general in Shanghai, said that because Israel may reduce its current 24% corporate income tax to 18% in the future, Koor Industries is likely to hope to delay the acquisition of all the shares of MA Industries by obtaining a loan. Income, in order to reduce the income tax it may have to pay in the moment.
Due to a large loss of 367 million shekels (about $95 million) in the third quarter of last year, Koor Industries lost a total of $49 million in shekels (approximately $14 million) before the first nine months of the year.
Facts have proven that Sinochem is viable even if it initiates a comprehensive purchase of MA Industries. However, IDB Group believes it is necessary to maintain Koor Industries’ equity in MA to meet IDB's strategic development needs in China.
Nochi Dankner, chairman of IDB Holdings Ltd., believes that "this acquisition will open the door for more transactions in China in the future."
However, the deal also caused dissatisfaction among public investors. They believe that Koor Industries directly enjoyed the loan facilities provided by Sinochem Corporation. In fact, this loan should be regarded as the income of all shareholders of MA Industries and be evenly distributed. As of press time, the dispute has not yet been resolved.
Layout of overseas agrochemical markets Following the footsteps of multinational companies in Europe and the United States, Chinese state-owned companies have joined the ranks of Israeli companies that have acquired new products for R&D.
In recent years, Sinochem has been accelerating the consolidation and restructuring of the agrochemical sector. This is another big step in the overseas market after Sinochem acquired the silicone business of Adisseo, Keyos, and Rhodia.
Chang Zhizhi stated: "This acquisition will not only expand Sinochem's production capacity and introduce advanced pesticide production technology, but also the global sales network of MA Industries will help Sinochem International expand its business."
MA has sales channels in more than 100 countries around the world. Its main production base is in Israel and Brazil, while it has a mature sales network in Colombia, Greece and Spain. The company has also recently expanded its market in North America and Asia.
Chang Yongzhi believes: "MA's business and Sinochem have certain synergies."
MA Industries' product line includes insecticides, fungicides, acaricides, herbicides, and plant growth regulators. At the same time, the company is also involved in the development and production of fine chemicals, industrial chemicals and fluorescent agents, antioxidants, nutrients and health care products. This helps China Chemicals to enrich its agrochemical product line.
According to another analysis, Sinochem hopes that through this acquisition, it will integrate its agricultural chemical sector and become bigger and stronger. This is obviously positive for the three listed agrochemical companies controlled by the company, and does not rule out China Chemical Industry's agrochemical group. The consolidation of the plate companies may be possible.
The acquisition of Israeli companies developing new products has always been the practice of multinational companies in Europe and the United States, and now China's central enterprises have also joined the ranks.
Israel’s Consul General Ayjak expressed hope that Sinochem will still leave MA’s R&D center in Israel and give full play to its technical advantages.
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