ChemChina and Sinochem are merging their agricultural assets into a new holding company named Syngenta Group, which will be based in Shanghai, China.

The reorganization includes Swiss agrochemicals producer Syngenta, which ChemChina acquired in 2017, and Israeli crop protection company Adama, wholly owned by ChemChina since 2016.

The two state-owned Chinese giants said the move aims to further deepen the reform of state-owned enterprises and optimize resource allocation and is also an important measure for Sinochem and ChemChina to further strengthen cooperation.

Adama added that the newly formed group is expected to become the world’s leading agricultural inputs company, spanning crop protection, seeds, fertilizers, additional agricultural and digital technologies, as well as a distribution network in China. Syngenta Group will reportedly have annual agrochemical sales of around $15 billion.

Under the terms of the merger, ChemChina will transfer its 100% ownership in Swiss Syngenta as well as its 74.02% share in Adama to Syngenta Group, which will itself acquire Sinochem’s primary agricultural assets.

The new group, said Adama, will “further bolster the alignment between the companies and capitalize on the value creation and synergy opportunities identified.” Adama will remain headquartered in Tel Aviv and maintain trading on the Shenzhen Stock Exchange.

Frank Ning, currently chairman of both ChemChina and Sinochem, will chair Syngenta Group, while Adama’s current CEO Chen Lichtenstein will be chief financial officer and relocate to Basel. Lichtenstein’s successor at Adama will be Ignacio Dominguez, currently the firm’s co-chief commercial officer.

The board of Syngenta Group is appointing Erik Fyrwald – currently head of Swiss Syngenta as its CEO. Mark Patrick, Syngenta’s current chief financial officer, will leave the company at the end of January.

Reuters news agency reported in December that ChemChina had approached Chinese state-backed investors for funds of up to $10 billion for a reorganization of its agrochemicals business ahead of a stock market listing in 2020.

The fundraising initiative and plans for a listing are said to be aimed at reducing ChemChina’s debt. ChemChina wanted 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.

Media reports have alluded to a potential merger between ChemChina and Sinochem for the past two-to-three years. Late in October 2019, the Financial Times said the companies were planning to abandon the mega deal because of challenges in combining the two management teams, although Reuters subsequently quoted Ning as denying this was the case.