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ChemChina, Sinochem

ChemChina and Sinochem consolidate agro interests

ChemChina and Sinochem have announced that they are consolidating their agricultural assets into a new holding company that will be called Syngenta Group. This move has fuelled speculation that the two Chinese firms will be merged, though this has been denied.

ChemChina acquired Syngenta, the Swiss-based crop protection giant, in 2016. At $44 billion, this was China’s largest ever acquisition abroad. According to Reuters, ChemChina recently approached Chinese state-backed investors for up to $10 billion in funding as part of a reorganisation of its agrochemicals business ahead of a public float on the technology-focused STAR market in mid-2020.

Many analysts view the fund-raising and eventual listing as a means to trim ChemChina’s debt and facilitate a merger with Sinochem. This would potentially further reduce the number of innovator agrochemical companies, which has already seen consolidation through Bayer’s acquisition of Monsanto and the Dow-DuPont merger.

The two companies are currently separate on the list of state-owned companies overseen by the State Assets Supervision & Administration Committee and have denied any such intentions. However, the Financial Times among others has reported that they have been making internal preparations to merge for some time and that individual business units are being encouraged to approach the capital markets ahead of such a move.

In July 2019, Sinochem chairman Ning Gaoning assumed the same position at ChemChina, replacing Ren Jianxin, who originally created the firm in the 1990s. After that, Qin Hengde, president of Sinochem Agriculture, was appointed to manage the Chinese agricultural operations of Syngenta, Sinochem and Israeli subsidiary Adama.

Syngenta has described this as “an oversight role” in which Qin will be guided by Syngenta CEO Erik Fyrwald. It added that there has been “absolutely no change” to ChemChina’s ownership of Syngenta and appointment of the board of directors.”

As part of the current announcements, it also emerged that Chen Lichtenstein, president and CEO of Adama, which is listed in Shenzhen and will also be incorporated into the new Syngenta Group, has been named as its CFO. He will remain based in Basel, the company said.

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