Makhteshim signs merger deal with ChemChina

ChemChina president Ren Jianxin: I have a lot of respect for the State of Israel.

Makhteshim Agan Industries Ltd. (TASE: MAIN) has signed the merger agreement with a subsidiary of the China National Chemical Corporation (ChemChina), which will acquire the public's holding in the company as well as 7% held by IDB Holding Corp. Ltd. (TASE:IDBH) unit Koor Industries Ltd. (TASE:KOR) at a company value of $2.4 billion (not including treasury shares held by Makhteshim itself and its subsidiary). Makhteshim will become private company, with ChemChina owning 60% and Koor owning the other 40%.

ChemChina will buy the Makhteshim shares in dollars, at $5.57 per share (NIS 19.93 at the current exchange rate). Makhteshim's public shareholders will receive $1.27 billion for 53% of the company, and Koor will receive $168 million for 7%.

ChemChina will also arrange for the provision of a $960 million non-recourse loan to Koor through a Chinese bank, which will only be secured by a lien on Koor’s shares in Makhteshim.

Koor said that it expects to report a capital gain of NIS 148 million on the sale, and it estimates the increase in its shareholders' equity at NIS 49 million.

ChemChina president Ren Jianxin said, "On behalf of ChemChina, I am very happy that we signed an agreement with IDB Group unit Koor to cooperate with Makhteshim Agan. Throughout the negotiations, we were shown that IDB chairman Nochi Dankner is a leader of great inspiration. Appreciation and respect developed between us and Mr. Dankner and his skilled and dedicated team. Mr. Dankner and I believe that we can jointly develop substantial economic activity in Israel, China, and everywhere in the world. I believe that this partnership will strengthen economic ties between the State of Israel and the People's Republic of China in agriculture, chemicals, science, and other fields.

He added, "I have a lot of respect for the State of Israel, its citizens, and our new partners in IDB Group. I expect many more years of thriving mutual partnership and friendship with Mr. Nochi Dankner. I thank him for the confidence and friendship toward ChemChina."

"We look forward to working together with Mr. Dankner and Makhteshim CEO Mr. Erez Vigodman and his energetic management team. We welcome the collective agreement Makhteshim signed with its workers in Israel and the agreement to continue Makhteshim's activity in Beersheva and Ashdod. We will also try to locate opportunities for working together with the local skilled and talented people in order to continue to develop Makhteshim's technological and scientific capabilities. We believe that Makhteshim's management and workers will be an essential part of achieving ChemChina's and Koor's goals of strengthening Makhteshim's global presence and leadership in the global agrochemicals market."

IDB chairman Nochi Dankner said, "The strategic partnership between IDB and ChemChina gives us great satisfaction as an important milestone in building economic relations between China and Israel. The deal reflects IDB's strategy and realizes its ambition to be a leading Israeli company while developing activity in emerging markets with an emphasis on China, a country that is a key growth engine for the global economy. I am pleased that our partners in ChemChina see this deal as an important step toward tightening relations with Israel's industry and economy, and that they believe that this collaboration will contribute to closer ties between Israel and China.

Compass Advisers acted as advisers on the transaction.

Makhteshim's share price rose 1.9% in early trading on the TASE to NIS 18.40, giving a market cap of NIS 7.85 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on January 9, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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