China Approves ChemChina and Sinochem merger
The Chinese government has approved the merger of state-owned enterprises ChemChina and Sinochem. The State-owned Assets Supervision and Administration Commission (Sasac) gave its approval on Mar. 31, stating that the companies will undergo a joint restructuring and become subsidiaries of a new and yet-to-be-named holding company. A timetable for the restructuring has not been disclosed.
The restructuring will “create synergy, build up a world-class chemical company and promote a high-quality development of the chemical industry in China,” said Sinochem, adding that the new holding company “will optimize resource allocation, strengthen innovation, and stimulate business growth.”
In recent years, said Sinochem, “global chemical giants have undergone consolidation to create large-scale chemical companies which play a leading role in chemicals R&D and product innovation.”
Sinochem and ChemChina have combined assets that are said to be worth about $245 billion. The combined entity will form an industrial giant with businesses in life science, materials science, basic chemicals, environmental science, rubber and tires, machinery and equipment, real estate and industrial finance.
Media reports have alluded to a merger between the two organizations during the past four-to-five years. Sinochem chairman Ning Baoning also took over as chairman of ChemChina in July 2018, a move seen as “extraordinary” at the time but also regarded as a sign that a merger was in the offing.
Early last year, the Chinese groups announced plans to merge their agrochemical assets under a new holding company named Syngenta Group, based in Shanghai. The reorganization included Swiss seeds giant Syngenta, which ChemChina acquired in 2017 and Israeli crop protection company Adama, wholly owned by ChemChina since 2016.
Speaking to the newspaper Financial Times, an analyst at a research center under Sasac said that ChemChina’s focus on traditional chemicals and Sinochem’s strength in foreign trade suggested it might take time for the two groups to find common ground. The analyst commented: “It is easy for Sinochem and ChemChina to merge since they report to the same boss (the government). The real challenge is to make them work more efficiently together.”
Author: Elaine Burridge, Freelance Journalist
