ChemChina and Sinochem plan $100bn merger

ChemChina and Sinochem are planning to merge next year, creating the world’s biggest chemicals group with $100 billion of revenues, according to senior bankers in Asia. The deal would follow ChemChina’s $43 billion purchase of Swiss agrochemicals leader Syngenta – due to close as early as this month – amid more general consolidation in the sector.

With 1.4 billion mouths to feed, China is eager to control technology in seeds, herbicides and pesticides, despite widespread domestic opposition to genetically modified crops. Bankers say the merger of the two domestic groups is politically driven, aimed at ensuring ChemChina has the financial strength to absorb Syngenta. The heavily indebted chemicals conglomerate will have sealed China’s largest overseas deal when the Syngenta purchase is concluded.

Bridge financing for the Syngenta purchase – which on Friday was backed by 80 per cent of the Swiss agribusiness’s shareholders – has been in place for more than a year, thanks to a banking consortium led by HSBC. But ChemChina has revealed few details of its final financing plans – a mix of loans, equity and support from Chinese conglomerate Citic.

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