China Close to Ditching ChemChina-Sinochem Merger, FT Says

(Bloomberg) -- China is planning to abandon a merger between state-owned giants ChemChina and Sinochem, the Financial Times reported, citing two people it didn’t identify.

The process was marred by challenges in bringing the two groups’ management teams together and over how the U.S. would treat the change of ownership of their global assets, including Swiss pesticide producer Syngenta AG, according to the report.

Instead of a full merger, Sinochem will probably attempt to take over several of ChemChina’s most-valuable assets in an acquisition much smaller than originally planned, according to the report. One of the people added that the merger process had not been completely abandoned.

Press officials at both companies declined to comment. China’s State-owned Asset Supervision & Administration Commission didn’t immediately respond to faxed questions.

The merger, which has been in the works for at least three years, was set to reshape the global chemicals industry and create an oil-to-chemicals company with more than $100 billion in assets. The deal was said to have been close to completion as long ago as December after senior officials finished preparatory work. The two parent companies have shared a chairman since the appointment in July 2018 of Sinochem’s Ning Gaoning to the same role at ChemChina. Widely known as Frank Ning, he was seen as the driving force behind the plans to combine the companies.

The credit spread on ChemChina’s dollar bonds widened by about 5 basis points across the curve after the report, according to credit traders.

The firms have been focusing on listing various units, including Syngenta, which ChemChina acquired for $43 billion in 2017. Top officials at the company, formally known as China National Chemical Corp., have begun internal work to prepare for a listing of the Swiss pesticide producer as soon as the middle of next year, Bloomberg reported in August. Sinochem, meanwhile, was said to be considering a listing of its oil trading and refining unit.

--With assistance from Neha D'silva, Ina Zhou and Sarah Chen.

To contact the reporters on this story: Alfred Cang in Singapore at acang@bloomberg.net;Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net

To contact the editors responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net, Jason Rogers

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