Adama Agricultural Solutions and China National Agrochemical Corporation, a strategic business unit of China National Chemical Corporation (ChemChina) and Adama's parent company, today announced the signing of an agreement for Adama to acquire control of businesses in China with 2013 total sales of approximately $850m.
Once finalized, the acquisition is expected to raise the company's revenues close to $4bn and give the company a major foothold in the Chinese market, which is expected, over time, to become one of the Company’s key growth engines. Adama expects to close the transaction during the first half of 2015.
“This transaction marks the realization of the vision set forth in our acquisition of a majority stake in Adama in 2011. We believe there is remarkable potential emanating from the combination between Adama and the Chinese businesses it is acquiring,” said Yang Xingqiang, Chairman of Adama. “These businesses are key players in the Chinese agrochemical industry, and we believe they will provide Adama with a significant foundation for a leading commercial and operational platform in China. When combined with Adama’s industry leading capabilities across the entire value chain, from its global commercial footprint, to R&D and manufacturing, this combination holds great promise, over time, to improve and simplify the lives of farmers in China and worldwide.”
“This is the most significant milestone in the evolution of Adama's six-decade history, and in our partnership with ChemChina,” said Chen Lichtenstein, President and CEO of Adama.
“The signing of the agreement with CNAC is a first step towards the creation of the only truly integrated China-Global player in the crop protection industry. Due to China's unique role in our industry, as both one of the largest and fastest growing global markets, and its substantial world-wide leadership in off-patent product development, launch and manufacturing, we view our strategic combination as facilitating our transformation into the most competitive, differentiated, and largest off-patent crop protection provider. Furthermore, we believe that we will be uniquely positioned to become a leading player in the still fragmented domestic Chinese crop protection market.”
Through the acquisition, Adama will acquire 100% of each of Jiangsu Anpon, Jiangsu Maidao, Jiangsu Huaihe (collectively called the Huai’an Hub) and Jingzhou Sanonda Holdings (Sanonda Holdings), for a cash consideration of approximately $324m, together with assumed net debt of approximately $300m. The Huai'an Hub is based in the vicinity of Huai’an City in Jiangsu Province, the heart of the agrochemical industry in China. Sanonda Holdings owns a 20% stake in Hubei Sanonda Ltd. (Sanonda) a company publicly traded on the Shenzhen Stock Exchange, and its acquisition by Adama will increase Adama's existing stake in Sanonda from 11% to 31%, with Adama thereby becoming the single largest shareholder in the company.
The transaction is expected to close during the first half of 2015, following Adama's intended US IPO, and is subject to certain customary closing conditions, including receipt of all required regulatory approvals.
