ChemChina, a leading Chinese chemicals manufacturer, plans to buy a controlling stake in Israel's Makhteshim Agan Industries for $1.44bn.
The proposed deal to buy a 60 per cent stake in MA Industries, a leading manufacturer of crop protectants such as pesticides, would be one of the largest Chinese acquisitions to date in the agrochemicals sector.
ChemChina's move underscores how vital food security is for China. In September, state-run Sinochem contemplated a bid for Canada's PotashCorp, showing the importance of the fertiliser sector to China, a big importer of potash.
The proposed deal values MA Industries, listed in Tel Aviv, at $2.4bn. When it filed its most recent quarterly results in late September, the company's net debt stood at $971m, giving it an enterprise value of $3.37bn.
If completed, the deal would take MA Industries private. Koor Industries, which is controlled by the Israeli IDB group, would own the remainder of MA Industries.
ChemChina plans to acquire the 53 per cent of MA Industries currently held by public shareholders, and an additional 7 per cent owned by Koor. The deal is set to be signed in the next two weeks and completed by the third quarter of 2011.
ChemChina, a state-controlled enterprise, already owns Qenos, an Australian plastics maker, and Adisseo, a French animal nutrition company. The group, which was established in 2004, spans 140 countries with 160,000 employees.
MA Industries is the world's seventh-largest agrochemicals company. Its main production facilities are in Israel and Brazil, with smaller plants in Spain, Colombia and Greece. It has more than 3,000 employees worldwide.
ChemChina is perhaps best known as the partner for Blackstone's first investment in China. The US private equity firm in 2007 paid $600m for a 20 per cent stake in China National Bluestar, a subsidiary of ChemChina
