from the November 2014 issue

China Enters Israel

Until this past year the Israel Chinese connection was noenexistent. The first major move by China was not in the high tech field but a major investment in one of Israel's major dairy companies. This was followed by a Chinese venture capital company that assumed a position into the local economy.

This actiivity has had a reciprocal effect as it has opened the doors for Israeli businessmen and entrepreneurs who formerly have had no relationship with the Chinese.

Carmel Ventures said it raised $194 million for its Carmel Ventures IV fund with participation from new strategic investors in Asia that include Chinese Internet search engine Baidu.

China's role in Israel has been growing fast as it offers a large market and source of funding at a time of growing calls, especially in Europe, for a boycott of Israel over its failure to make peace with the Palestinians.

We believe that this trend will continue and we will hear of increased rate of activity.

In the party at interest deal, ADAMA Agricultural Solutions will gain a major foothold in the Chinese market.

Agrochemicals company Adama Agricultural Solutions Ltd. (formerly Makhteshim Agan Industries) is acquiring Chinese businesses for $300 million and assuming a further $323 million in debt. In a party at interest deal, China National Agrochemical Corporation (CNAC), a strategic business unit of China National Chemical Corporation (ChemChina) and Adama's parent company, will sell the companies, which had 2013 sales of a $850m.

Adama files for $300m New York offering
Once finalized, the acquisition is expected to raise ADAMA's revenue to close to $4 billion annually and give the company a major foothold in the Chinese market. Adama expects to close the transaction during the first half of 2015.

Adama Chairman Yang Xingqiang said, "We believe there is remarkable potential emanating from the combination between Adama and the Chinese businesses it is acquiring. These businesses are key players in the Chinese agrochemical industry, and we believe they will provide Adama with a significant foundation for a leading commercial and operational platform in China."

Adama President and CEO Chen Lichtenstein said, "This is the most significant milestone in the evolution of Adama's six-decade history, and in our partnership with ChemChina. The signing of the agreement with CNAC is a first step towards the creation of the only truly integrated China-Global player in the crop protection industry."

Through the acquisition, Adama will acquire 100% of each of Jiangsu Anpon, Jiangsu Maidao, Jiangsu Huaihe (collectively called the Huai'an Hub) and Jingzhou Sanonda Holdings (Sanonda Holdings), for a cash consideration of approximately $323m, together with assumed net debt of approximately $300m. The Huai'an Hub is based in the vicinity of Huai'an City in Jiangsu Province, the heart of the agrochemical industry in China. Sanonda Holdings owns a 20% stake in Hubei Sanonda Ltd. (Sanonda) a company publicly traded on the Shenzhen Stock Exchange, and its acquisition by Adama will increase Adama's existing stake in Sanonda from 11% to 31%, with Adama thereby becoming the single largest shareholder in the company.

Reprinted from the Israel High-Tech & Investment Report November 2014

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