Sinochem Group and ChemChina in Talks Over Merger

17 Oct 2016 --- Chinese state-owned agrochemical giants ChemChina and Sinochem are in discussions about a possible merger, the latest in a wave of state tie-ups under President Xi Jinping.

The possible tie-up would create a fertilizer, chemicals, and oil giant boasting yearly revenues of nearly $100 billion, according to a report in Bloomberg, which revealed details of the merger.

Sinochem, headquartered in Beijing, is a sprawling business whose core businesses span agriculture, chemicals, energy, real estate and financial services.

The company, founded in 1950, is China's biggest producer of fertilizer, seed and agrochemicals. Its majority owned fertilizer subsidiary Sinofert is involved in the production and procurement of fertilizer on international markets as well as distribution and retail.

ChemChina is China's largest chemicals firm and is currently involved in the closing stages of finalizing a takeover of the Swiss seed group Syngenta in a $43bn deal, marking China's largest-ever foreign investment.

It is thought that the tie between Sinochem and ChemChina would not derail the ChemChina and Syngenta deal or cause fresh concern with anti-trust regulators.

Both ChemChina and Sinochem, which denied talks over a merger were taking place, are overseen by Assets Supervision and Administration Commission, the state-owned body in charge of government-controlled companies in China.

The regulatory body is looking to merge state-owned companies to create larger state-owned companies, which have an enhanced reputation both domestically and internationally.

According to the Financial Times, a merger would be seen as a knock for ChemChina's chairman Ren Jianxin, whose reputation could be tarnished after being enhanced by its acquisition of Syngenta.

It says the merger has been driven by Sinochem's chairman, Ning Gaoning, who joined Sinochem at the start of 2016.