ChemChina and Sinochem have announced plans to consolidate their agricultural businesses into a new holding company within ChemChina. The company will be called Syngenta Group and be based in Shanghai. It is expected to become the the world’s leading agricultural inputs company, spanning agricultural chemicals, seeds, fertilizers, additional agricultural and digital technologies, as well as a distribution network in China, the companies say.
Syngenta Group will have estimated agchem sales of about $15 billion/year. ChemChina and Sinochem say the move also aims to “further deepen the reform of [Chinese] state-owned enterprises and optimize resource allocation.”
ChemChina intends to transfer to Syngenta Group its 100% stake in agricultural chemical and seeds giant Syngenta (Basel, Switzerland) and ChemChina’s 74.02% stake in Adama (Tel Aviv, Israel), the generic agchem market leader. Syngenta Group intends to acquire Sinochem’s main agricultural assets. Adama says that forming the new group will bolster the alignment between the companies and capitalize on the value-creation and synergy opportunities that have been identified. Adama will remain headquartered in Tel Aviv and maintain its stock-market listing in Shenzhen, China.
Frank Ning, chairman of ChemChina and Sinochem, will be chairman of the new company. The board of Syngenta Group will appoint Erik Fyrwald as Syngenta Group’s CEO, and Chen Lichtenstein will be nominated as Syngenta Group’s CFO. Fyrwald is currently CEO of Syngenta, which ChemChina acquired for $43 billion in 2017. Lichtenstein, currently president and CEO of Adama, will relocate to Basel. ChemChina acquired a majority stake in Adama in 2011.
Meanwhile, Mark Patrick, current CFO of Syngenta, will leave the company at the end of January. Ignacio Dominguez, currently co–chief commercial officer at Adama, will succeed Lichtenstein as president and CEO of Adama.
Adama, Syngenta, and Sinochem’s agriculture-related activities “have made significant advances in their collaboration over the last year, generating meaningful additional revenue through cross sales and benefiting from procurement and operational savings,” Adama says. Syngenta and Adama had 2018 sales of $9.9 billion and $3.6 billion, respectively. Sinochem had 2017 agchem sales of $1.3 billion.
Reuters reported in December that ChemChina had approached Chinese state-backed investors for up to $10 billion in funding for a reorganization of the company’s agchem business ahead of a stock-market listing in 2020. The fundraising initiative and plans for a listing are reportedly aimed at reducing ChemChina’s debts. ChemChina wants to list Syngenta, and possibly now Syngenta Group, on China’s technology-focused STAR market in mid-2020, according to fundraising documents dated October 2019.
By Kartik Kohli
Source: Chemical Week
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