As Syngenta deal closes, ChemChina, Sinochem press $120 billion deal
Chinese state-owned Sinochem and ChemChina are in merger talks to create the world’s biggest industrial chemicals firm, to be headed by Sinochem chief Ning Gaoning, four people with knowledge of the negotiations said.
A deal could be announced by the end of the year, the people said, potentially just months after ChemChina completes its own $43 billion purchase of Switzerland’s Syngenta, China’s biggest overseas deal to date. A consolidation of Sinochem and ChemChina would be worth around $120 billion, one of the people said, topping companies like industrial chemi- cals giant BASF. Talks to create a Chinese chemicals powerhouse were first reported last year, but were dismissed by both companies as rumor. Sinochem and China National Chemicals Corp, as ChemChina is officially known, did not immediately respond to requests for comment on Tuesday. A Syngenta spokesperson said the company was not aware of any talks.
The two companies have accelerated negotiations after regulators last month cleared ChemChina’s acquisition of Syngenta, the people said. With the approval also of over 80 percent of Syngenta shareholders bringing completion of that deal nearer, focus has shifted to creating a Chinese powerhouse. Beijing sees a Sinochem/ChemChina deal as a blueprint for streamlining and consolidating its sprawling, debt-heavy state-owned enterprises, the people said, leaving fewer, but more powerful, national champions.
“This is the priority now for both companies. The message from the top to the managers is very clear: don’t be distracted by anything else,” one of the people said, adding that the focus on this deal accounted in part for Sinochem recently ditching a plan to invest in Noble Group, a loss-making commodity trader. — Reuters