ChemChina seals combination of Israel’s Adama with Sanonda

ChemChina is selling Israeli crop-protection company Adama Agricultural Solutions to a firm it controls for $2.8 billion, paving the way for completing a previously announced combination of the two businesses and listing it on the stock market.

China National Chemical Corp. (ChemChina), as the state-owned firm is officially called, is selling Adama to Hubei Sanonda Co. Ltd. for about 18.6 billion yuan ($2.8b.), Sanonda said in a securities filing late on Tuesday.

Israel’s Discount Investment Corp. agreed to sell a 40% stake in Adama to ChemChina in July for $1.4b. including debt, paving the way for the two businesses to combine. ChemChina already owned 60% of Adama before the July deal.

That deal came as China, the world’s largest agricultural consumer, is looking to secure food supply for its population.

Agrochemicals companies have been consolidating, partly due to falling commodities prices hitting farm incomes. ChemChina itself is finalizing a $43b. takeover of Syngenta AG, extending by almost two months a deadline for investors in the Swiss pesticides and seeds group to tender their shares.

Sanonda, based in China’s central Hubei province, is issuing 1.82 billion new shares to ChemChina at a price of 10.20 yuan each to pay for Adama.

Sanonda also said it plans to raise up to 2.5 billion yuan in a private placement of 245.1 million shares at the same price to help fund Adama’s production and expansion projects.

ChemChina was already the biggest shareholder of Sanonda, with a 31% stake through subsidiary China National Agrochemical Corporation, and will own 75% after the two share sales, Sanonda said.

“The listed company aims to boost synergy and enhance overall profitability through a merger with Adama,” Sanonda said in the filing.