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Main M&A Cases in Pesticide Industry, 2011


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.

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									Main M&A Cases in Pesticide Industry, 2011

Summary: 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

Tags: M&A, pesticide, capital, IPO, Hebei Veyong, Huayang Technology, agrochemical player,
Xinneng Zhangjiagang, China Agri-Business, Shandong Dacheng, Lianhe Technology

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

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

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

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.

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