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Step towards merger? Sinochem and ChemChina move closer with Syngenta appointment

Former ChemChina chairman Ren Jianxin and Michel Demare of Syngenta in 2016

Former ChemChina chairman, Ren Jianxin, and Michel Demare of Syngenta during a news conference in 2016 when the take-over of the Swiss company was announced. 

(© Keystone/Georgios Kefalas)

A Sinochem executive is taking over the China operations of Syngenta, the Swiss subsidiary of rival agribusiness giant ChemChina, even though the two Chinese conglomerates insist they have not merged.

The appointment of Qin Hengde, president of Sinochem Agriculture, as head of a team overseeing the agricultural operations within China of Syngenta, Sinochem and ChemChina’s Israeli subsidiary Adama comes despite Sinochem - officially - having no ownership over Syngenta, Adama or their parent firm, ChemChina. 

In July, Sinochem chairman Ning Gaoning was named as chairman of ChemChina, replacing Ren Jianxin, the dealmaker who cobbled ChemChina together out of a number of bankrupt local chemicals firms in the late 1990s.

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Despite having the same chairman, two conglomerates deny that they have any plans to merge.

A merger of Sinochem with ChemChina has been discussed in Beijing ever since ChemChina’s $44billion (CHF43.7 billion) bid for Syngenta, China’s largest overseas acquisition, in the midst of an industry-wide consolidation from seven major global seeds and chemicals firms to four.

Such a merger would cut that number to three, a degree of concentration that has alarmed environmental and food safety activists Europe and China. 

“Mr Qin’s role is an oversight role and [he] has been retained by Syngenta in this regard and will take guidance from Syngenta CEO Erik Fyrwald,” a Syngenta spokesman said on Thursday. 

There is “absolutely no change in the ownership or control of Syngenta,” he said. “ChemChina owns Syngenta and the company is governed by a board made up of ChemChina-appointed and independent directors.”

Mr Qin, who has served in executive positions at Sinochem since 2004, briefly served as non-executive chairman of Singapore-based Halcyon Agri in 2017 after Sinochem took over the natural rubber firm. He has also served as chief executive of Hong Kong-listed Sinofert, Sinochem’s fertiliser arm.

He has no connection to ChemChina, Syngenta’s controlling shareholder, and replaces Andrew Guthrie, who is retiring in March after 18 years at Syngenta. 

A Sinochem spokesman referred the Financial Times to the list of state-owned companies overseen by the State Assets Supervision and Administration Committee. “If the list lists us both, we are two companies,” he said.

On its website, Sasac lists Sinochem and ChemChina as separate state-owned companies. A Sasac spokesman declined to comment to the FT.

The FT has previously reported that Sinochem and ChemChina have made internal preparations to merge. 

Copyright The Financial Times Limited 2019

Financial Times/swissinfo.ch

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