Hong Kong | Reuters — China’s Hubei Sanonda will acquire Israel’s Adama Agricultural Solutions for about 18.6 billion yuan (C$3.67 billion), Sanonda said on Tuesday.
Pesticide firm Sanonda, based in China’s central Hubei province, also said it aimed to raise up to 2.5 billion yuan (C$493 million) in a private placement of shares to help fund Adama’s production and expansion projects.
“The listed company aims to boost synergy and enhance overall profitability through a merger with Adama,” Sanonda said in a filing to the Shenzhen stock exchange.
Agrochemical companies worldwide have been consolidating, partly due to falling commodities prices hitting farm incomes. Adama’s space in the agrochemical market is mainly in off-patent chemistry, where it bills itself as the world’s biggest marketer of off-patent products.
Israel’s Discount Investment Corp. in July agreed to sell a 40 per cent stake in Adama to Sanonda’s parent, China National Chemical Corp. (ChemChina), for US$1.4 billion, including debt. ChemChina owned 60 per cent of Adama before the deal.
The deal paved the way for a merger between Adama, the world’s biggest producer of generic crop protection products, and smaller agrochemical producer Sanonda.
Adama, formerly Makhteshim Agan Industries, was set up in a 1997 merger between Israel’s Agan Chemical Manufacturers and Makhteshim Chemical Works.
ChemChina, which in February also announced a friendly bid for Swiss agrochemical and seed giant Syngenta, first bought its controlling stake in privately-held Makhteshim Agan in 2011.
Under the name MANA Canada, Makhteshim Agan entered the Canadian market in 2008 and later opened an office in Winnipeg, headed by CEO Andrew Mann. Makhteshim Agan consolidated its 26 various subsidiaries worldwide under the new name, Adama, in 2014.
Adama, whose Canadian portfolio now includes over 30 herbicide, insecticide and fungicide brands, bills itself as the world’s seventh-biggest crop protection company, booking US$124 million in profit on US$3.06 billion in sales in 2015.
— Reporting for Reuters by Twinnie Siu, Lee Chyen Yee and Meg Shen with files from AGCanada.com Network staff.