Adama Agricultural Solutions said on Sunday a possible merger with smaller Chinese rival Sanonda, first announced last year, could be completed in the first half of 2017.
Sanonda is a subsidiary of China National Chemical Corp (ChemChina), which also owns 60 percent of Adama and may also buy the remaining 40 percent of the Israeli company, which is the world’s biggest producer of generic crop protection products.
The proposed deal is part of a big push among global agrochemicals companies to consolidate, partly in response to a drop in commodity prices that has hit farm incomes.
ChemChina is in the process of acquiring Swiss pesticides and seeds maker Syngenta for $43 billion but its business is expected to be run separately from Adama.
Adama said two recent developments had helped to pave the way for the potential merger.
The first was when a Chinese agency published a proposed amendment to China’s securities regulations that would allow a global entity to be combined with one publicly-traded in China. Sanonda is listed on the Shenzhen Stock Exchange.
That was followed by Adama shareholders agreeing to a unit of ChemChina, or a third party designated by it, buying the remaining 40 percent stake in Adama from Israel’s Discount Investment Corp. That transaction would value Adama’s equity at approximately $3.5 billion.
The merger of Adama and Sanonda would speed up Adama’s integration into China and allow it to be floated on the Shenzhen exchange, Adama said.
Sanonda’s shares have been suspended from trading since Aug. 2015 when the proposed combination was first announced. They are expected to resume on Aug. 4 when Adama said it hoped to conclude the framework of the deal.
The combined company will be headquartered in Israel and keep the Adama name and brand, Adama said. It will be run by Adama’s management team, while China will become a significant centre for the business. (Reporting by Ari Rabinovitch. Editing by Jane Merriman).
http://www.reuters.com/article/adama-ma-sanonda-idUSL8N1A305U
Source: Reuters.com