Makhteshim Agan, ChemChina complete record $2.4b. merger

Completion of strategic partnership agreement is ‘foundation stone’ for company’s ambitions abroad, says IDB head Dankner.

By COMPLETION OF STRATEGIC PARTNERSHIP AGREEMENT I
October 17, 2011 23:35
2 minute read.
IDB GROUP to merge with ChemChina.

business merger 311. (photo credit: Courtesy IDB)

The merger of Israeli agrochemicals manufacturer Makhteshim Agan Industries with a China National Chemical Corporation (ChemChina) subsidiary was completed on Monday. The deal, worth around NIS 8.78 billion ($2.4 billion), is the largest ever between a state-owned Chinese company and an Israeli company.

Makhteshim becomes a private company under the deal, effective immediately. Chem- China subsidiary China National Agrochemical Corp.

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now owns 60 percent, while Koor Industries, a subsidiary of Nochi Dankner’s IDB Group, holds on to the remaining 40%.

CNAC, China’s largest agrochemical producer, acquired 53% of Makhteshim from public holdings for NIS 4.657 billion ($1.272 billion) and another 7% from Koor for NIS 615 million ($168 million). In addition, Koor received NIS 3.514 billion ($960 million) in a seven-year non-recourse loan secured by its remaining 40% stake in the company.

Company headquarters will remain in Israel, and existing management personnel will continue in their positions.

Additionally, all Makhteshim employees’ options will be cancelled. The options will be purchased for a total of NIS 73 million, including NIS 16 million to Makhteshim president and CEO Erez Vidogman.

Makhteshim Agan is one of the world’s leading manufacturers and distributors of cropprotection products, with a history dating back to prestate Israel. The group was formed from the 1997 merger of Agan (established in 1945) and Makhteshim (established in 1952). It became a publicly traded company in 1998, and boasted sales revenues of $2.37 billion last year, making it the seventh-highest grossing agrochemicals company in the world.

The deal, which followed a year of negotiations, was completed just one week after IDB controlling shareholder Nochi Dankner agreed to sell his majority share in supermarket chain Shufersal to British billionaire Leo Noé and Shufersal partners Matthew Bronfman and Shalom Fisher.

“The completion of this strategic partnership agreement between ChemChina and IDB Group is the foundation stone for the realization of IDB Group’s ambition to divert its activities abroad and develop a global presence with an emphasis on the Chinese market,” Dankner said of the merger.

“The deal with ChemChina constitutes an important step for IDB Group and for Israeli industry and we believe that it will contribute to the building of economic relations between Israel and China – a central player in the powering of global economic growth.”

ChemChina President Ren Jianxin called Dankner an “inspiring business leader” and “ardent patriot” for Israel, and said the deal would cement Makhteshim’s standing as one of the world leaders in agrochemicals manufacturing.

“Makhteshim Agan’s advanced technologies, together with its entire marketing arrangement and its excellent management team and staff, will all contribute to the creation of a positive synergy in conjunction with our agrochemical dealings in China,” said Jianxin.

“Supplying food to the world is a central challenge for ChemChina, and the cooperation between us will help add momentum to this vision.”


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