ChemChina/Makhteshim Agan Agreement
ChemChina and Koor Industries Sign Agreement valued at $3.4 billion regarding Makhteshim Agan
We are pleased to announce that Compass Advisers acted as exclusive financial advisor to China National Chemical Corporation (“ChemChina”), China’s second largest chemical enterprise, in its recently announced agreement to acquire a 60% controlling stake in Tel Aviv, Israel‑based Makhteshim Agan Industries (“MAI”), the world’s largest manufacturer and distributor of branded off‑patent crop protection chemicals. At an enterprise value of $3.4 billion, this transaction is one of the largest in the agrochemicals sector, the largest cross‑border acquisition of an Israeli company and one of the largest cross‑border acquisitions by a Chinese SOE (State‑Owned Enterprise) in the past five years. The transaction will enable ChemChina to become the global leader in the generic agrochemicals industry.
In the transaction, ChemChina will acquire the approximately 53% interest in MAI held by MAI’s public shareholders and an additional 7% stake from MAI’s controlling shareholder, Koor Industries Ltd. (“Koor”), an affiliate of IDB Group, Israel’s largest diversified holding company. Following the transaction, MAI will become a private company owned 60% by ChemChina and 40% by Koor. The combination of ChemChina and MAI creates an unrivalled global agrochemicals platform that combines MAI’s broad product portfolio, development capabilities and international distribution network with ChemChina’s world‑class manufacturing resources and extensive distribution network in China.
The ChemChina transaction highlights Compass’ capabilities as an independent strategic advisory firm specializing in creative solutions for complex cross‑border transactions. Compass deployed a unique team experienced in Chinese, Israeli and international markets and business practices and provided our trademark discreet, senior‑level advice to ChemChina on a strategically important transaction of international significance.
ChemChina’s press release continues below:
ChemChina and Koor of the IDB Group signed a strategic cooperation agreement regarding Makhteshim Agan
Under the agreement MAI will become a private company held by ChemChina (60%) and Koor of the IDB Group (40%)
BEIJING and TEL AVIV January 9, 2011 – China National Agrochemical Corporation of China National Chemical Corporation (ChemChina) and Koor Industries of the IDB Group, one of Israel’s leading business groups, signed yesterday evening a strategic cooperation agreement regarding Makhteshim Agan Industries (MAI), the world’s largest generic agrochemical company.
Following the completion of the transaction, MAI will become a private company held by ChemChina (60%) and Koor Industries of the IDB Group (40%). The transaction is based on MAI’s equity valuation of US$2.4 billion.
Mr. Jianxin Ren, President of ChemChina, stated today: “On behalf of ChemChina, I am delighted that we have signed agreements to become partners in Makhteshim Agan with Koor Industries of the IDB Group. In the course of negotiations we have come to admire and respect the inspired leadership of Mr. Nochi Dankner, Chairman of the IDB Group, and his talented and dedicated team. Mr. Dankner and I believe that together we can develop socially and fiscally responsible business opportunities in Israel, China and elsewhere around the globe. Our partnership has added significance because it can strengthen the economic ties between the State of Israel and the People’s Republic of China in the fields of agriculture, chemical science and beyond.”
“We are looking forward to working with Mr. Erez Vigodman, CEO of MAI, and his highly motivated management team. We welcome MAI’s recent collective agreement with its employees in Israel and the agreements to maintain operations in MAI’s plants in Be’er-Sheva and Ashdod. Furthermore, we will be looking for opportunities to work together with local Israeli talent in Israel to further develop MAI’s technological and scientific capabilities. We believe the management and employees of MAI will be an integral part of ChemChina and Koor’s plan to cement MAI’s global footprint and leadership in the global agricultural marketplace.”
“I have great respect for the State of Israel, its people, and our new partners at the IDB Group. I am looking forward to many years of mutually prosperous partnership and friendship with Mr. Dankner and thank him for investing his trust and friendship with us at ChemChina.”
Mr. Nochi Dankner, the Chairman of IDB Group, said today: ”The strategic partnership signed today between ChemChina and the IDB Group is a significant milestone for the economic relations between China and Israel. This transaction exemplifies the strategy of the IDB Group to be a leading Israeli business group, with activity in emerging markets and with a focus on China, which is the main engine growth of the global economy. I am pleased that our partners in ChemChina see this deal as an important step to strengthen ties with Israeli industry and the Israeli economy as a whole, and I am sure that this cooperation will contribute to strengthening the relationship between the People’s Republic of China and the State of Israel.”
“This partnership is a consequence of the excellent relationship which developed between the ChemChina team and the IDB team over the course of months of negotiation leading to the agreement, which was managed throughout with respect and collegiality due to the leadership and guidance of Mr. Ren Jianxin, the President of ChemChina.”
“I met Mr. Ren a few years ago and our friendship grew closer during the negotiation period. I found him to be an intelligent and prudent person, a determined and pragmatic businessman who works to achieve his goals in a cooperative manner which is sensitive to the interests of all the parties. Mr. Ren’s patriotism led him to build ChemChina into one of the leading conglomerates in China. I am glad that I met him, and proud that I earned his friendship.”
“I want to thank the dedicated team of the IDB Group which implemented this deal, under Mr. Ami Erel, President of DIC and Chairman of MAI, for his wisdom and diligence on every single detail during the negotiation. I also thank Mr. Erez Vigodman, MAI’s CEO, whom the partners trust to lead MAI to success. I am sure that the partnership between ChemChina and IDB will strengthen MAI’s global competitiveness and enable MAI’s manufacturing activity to remain in Be’er-Sheva and Ashdod, assuring the livelihood of MAI’s dedicated workforce.”
Under the agreement, ChemChina will buy 53% of MAI shares held by the public for US$1.272 billion and another 7% of MAI shares held by Koor for US$168 million. As part of the deal ChemChina will arrange to provide Koor with US$960 million non recourse loan for 7 years guaranteed by Koor’s stake in MAI of 40%.
ChemChina and Koor signed a shareholders agreement to determine their relations in MAI including nomination of directors on a proportional basis. ChemChina will appoint MAI’s Chairman and Koor will appoint MAI’s Vice Chairman.
Closing of the transaction is expected during the second or third quarter of 2011 and is still subject to certain approvals. Compass Advisers is ChemChina’s financial adviser in this transaction.
China National Chemical Corporation is a leading large-scale chemical enterprise group in China, who is mainly engaged in new chemical materials and specialty chemicals, basic chemicals, oil refining, agrochemicals, rubber tires, chemical equipment, etc. ChemChina has total assets of about US$29 billion and total sales of about US$23 billion in 2010.
About IDB Group
The IDB Group is one of the leading business groups in Israel with total assets of about US$40 billion. IDB holds leading corporations in key business sectors including: Finance, Industry, Technology, Communication, Retail and Real Estate. Based on a domestic and global presence through subsidiaries in over 100 countries worldwide. IDB holds 20 portfolio companies, which are traded on the Tel Aviv Stock Exchange (TASE), as well as on the American, and European stock exchanges (NASDAQ, NYSE, AMEX, SWX, and AIM).
About Makhteshim Agan Industries
Makhteshim Agan Industries, Ltd. (TASE: MAIN) is a world leading manufacturer and distributor of branded off‑patent crop protection products. With sales of US$2.2 billion in 2009, MAI is the world largest generic agrochemical company, ranks seventh in global agrochemical companies and fourth in Europe. The Company is characterized by its know‑how, high‑level technological-chemical abilities, expertise in product registration and observance of strict standards of environmental protection, stringent quality control and global marketing and distribution channels. The Company is well positioned to leverage its global scale in sourcing, manufacturing, development and registration to support attractive international growth drivers.