Chinese agrochemical company buys Adama Agricultural Solutions
Yang Xingqiang, Chairman of Adama and President of ChemChina, said: "We are delighted to be reaching the culmination of Adama's integration with our crop protection businesses in China. We are confident that the combination of Adama and Sanonda, under Adama's strong leadership as demonstrated by its market outperformance in recent years, will be successful for all stakeholders. The combined company will be well positioned to capitalize on its unique strengths, from cutting-edge Israeli agricultural technology and global market access to a powerful commercial and operational presence in China."
Chen Lichtenstein, President and CEO of Adama, said: "Since the inception of our partnership with ChemChina five years ago, we have all been working hard to plan and execute our strategic vision of creating a leading, unified company, obtaining a unique standing as the only integrated Global-China crop protection player. Adama intends to invest the newly raised capital in the acceleration of our growth, both globally and in China."
An Liru, Chairman of Sanonda's Board of Directors, said: "Sanonda looks forward to combining with Adama and together becoming a leader in both Chinese and global crop protection. This combination allows us to scale our business and commercialize our products in the global market, while benefiting from Adama's world-class technology and advanced portfolio."
The transaction values the combined company's pro forma equity at approximately $4.0 billion, placing its pro forma enterprise value at approximately $5.0 billion. It will be accomplished through the issuance by Sanonda of approximately 1.82 billion new shares at a value of RMB 10.20 (approximately $1.54) per share, to Adama's shareholder CNAC, in exchange for all the shares in Adama, which are valued for the purposes of this transaction at approximately $2.8 billion. The contemplated equity raise is to be fully taken up by China Cinda Asset Management Co. Ltd., a Hong-Kong listed asset management group with total assets of $110 billion. Upon completion of the transaction and the equity raise, the combined company will be owned approximately 75% by CNAC, with the remaining 25% owned by a combination of institutional and retail investors.
Upon receipt of the relevant corporate approvals, the combined company will operate under the ADAMA name and brand and will be led by Adama's global management team, to be joined by colleagues from China engaged with the combined China operation. The central functions of the combined company will continue to be run from Israel, including the company's global R&D, registration and operations. The company will continue to further its Israeli and global business culture, as well as the growth of its Israeli operations alongside its China build-up. Adama's bonds will continue to be publicly traded on the Tel Aviv Stock Exchange.
The draft plan for Adama's combination with Sanonda and the concomitant capital raise has now been submitted to the Shenzhen Stock Exchange. The transaction is expected to be completed in the first half of 2017, subject to the execution of definitive agreements and the receipt of regulatory and corporate approvals, and following the completion of the recently announced acquisition by CNAC of Koor Industries' stake in Adama. Sanonda's shares, which have been suspended from trading since the intended combination was first announced, are expected to resume trading in the coming days.
Goldman Sachs Gao Hua Securities and Guotai Junan Securities are serving as financial advisors for the transaction with Global Law Office acting as legal advisor.