China Approves Sinochem-ChemChina Merger
What’s new: China approved the combination of two state-owned chemical giants, Sinochem Group and ChemChina Group, which have been long the subject of merger speculation.
The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) reported the approval late Wednesday in a one-line statement posted on the regulator’s website.
In a separate statement, Sinochem said the two companies will undertake a joint restructuring under which they will become subsidiaries of a new holding company wholly owned by SASAC.
Sinochem said the restructuring will create synergies, build a world-class chemical company and promote high-quality development of the industry in China.
The background: In January, the two companies reported the consolidation of their agricultural chemical assets into newly formed Syngenta Group, which includes Swiss pesticide producer Syngenta AG. ChemChina acquired Syngenta in 2017 for $43 billion in the biggest-ever overseas acquisition by a Chinese company.
The merger of Sinochem and ChemChina, rumored to have been in the works for years, is thought to have been one of the Chinese government’s conditions for supporting the Syngenta deal.
Syngenta is now preparing for a public offering on the Chinese mainland by mid-2022. Various obstacles have delayed the flotation.
In 2019, China appointed Yang Hua, former chairman of China’s biggest offshore oil and gas company, as general manager of Sinochem to oversee its merger with ChemChina. Yang has worked in the industry for decades and has strong experience in overseas mergers.
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