The agricultural industry is welcoming the transformation and upgrading of the tide of mergers and acquisitions

[China Agricultural Machinery Industry News] On August 3, Century Sunshine Group Holdings Co., Ltd. and Russia Akon Company submitted a contract in Linyi, Shandong, to acquire the entire share capital of Hongri Akon Co., Ltd. held by Russia Akon Company. Upon completion, Century Sunshine owns the entire equity interest in the Target Company and indirectly owns approximately 50.5% of each of Hongri Akang and Shandong Zhongfu, Linyi Luozhuang and Linyi Dingrui.

The agricultural industry is welcoming the transformation and upgrading of the tide of mergers and acquisitions

The acquisition of Hong Kong Akon, with a 50-year history of development, is a major event in China's fertilizer industry. What is even more interesting is that this merger may be just a microcosm of the major changes in China's agricultural capital industry. On July 18, Xinyangfeng announced the acquisition of a 51% stake in Jiangsu Lugang Modern Agriculture Development Co., Ltd.; on September 8, Stanley Agricultural Group Co., Ltd. acquired a 35% stake in Anhui Hengji Seeds...

Behind the major acquisition is resource integration or subject speculation? Can peer-to-peer mergers and acquisitions save the agricultural enterprises in trouble? The reporter interviewed industry stakeholders and made detailed answers to this.

Can a merger make a business a different way?

Century Sunshine Group's acquisition of Hongri Akang is destined to be at the forefront of the 2016 China's fertilizer industry hot topic list.

One is a listed company on the main board of the Hong Kong Stock Exchange. It owns Asia's largest open-air silicon-magnesium compound fertilizer raw material mine. The two main businesses involve new materials magnesium alloy industry and ecological fertilizer industry; one is a fertilizer enterprise with 50 years of development history. In China's fertilizer industry, it has long-term independent intellectual property rights and enjoys the "low-temperature conversion method of potassium chloride". Shen Shijie, general manager of Shandong Hongri Akon Chemical Co., Ltd. said after the completion of the merger: "We must not only inherit the concept of "Responsibility Culture" and "Responsibility" of Century Sunshine Group, we also carry forward the fine traditions and red of Hongri. The spirit of the day, 'new red sun, new dreams, new wealth' will be the common pursuit of all Hongri people and all partners."

In the eyes of the industry, the "New Red Day" does have the capital to realize the "new dream." After Century Sunshine Group acquired Hongri Akang Company, “Hongri” will form a joint effort with existing Jiangsu Longteng Chemical Co., Ltd., Jiangsu Zhanlan Technology Development Co., Ltd., Lianyungang Green Drop Fertilizer Co., Ltd. and Jiangxi Tianrui Harvest Chemical Co., Ltd. It has formed an ecological fertilizer industrial base in the south, central and northern regions of China, with an annual production capacity exceeding 4 million tons, covering the domestic market.

The relationship between adversity and mergers or acquisitions may not be important. The criteria for success should be whether the company can survive healthily. The Hong Ri A Kang merger case is like a big show, and there are also other voices around it.

In the first half of the year, Xinyangfeng acquired Jiangsu Green Harbor to complete the layout of modern facility agriculture and introduced Huada Science and Technology cooperation breeding. At the same time, it completed the overseas layout through the Australian farm and invested in the establishment of the downstream industrial chain of Luochuan Xinyangfeng Fruit Industry. The industry believes that the future of new Yangfeng will no longer be a pure fertilizer enterprise, but a modern and comprehensive agricultural high-tech enterprise. In the future, Greenport can use the channel and financial support of Xinyangfeng to quickly promote its modern planting mode and form large-scale production, thereby increasing profitability.

In addition, Stanley recently acquired a 35% stake in Anhui Hengji Seeds. Henderson Seeds is mainly engaged in seed cultivation and business operations. Participating in seed companies has become an important part of Stanley's integration of agricultural resources. In 2015, Stanley formulated a development strategy for the transformation to agricultural service providers. This participation in Henderson Seeds will further improve its agricultural resources integration service platform and enhance the company's comprehensive competitiveness in the field of agricultural services.

Frequent mergers and acquisitions between agricultural and commercial enterprises are not only eye-catching, but also cause people to doubt: Can mergers and acquisitions become a panacea for the rescue of enterprises?

In this regard, Mao Guobin, assistant general manager of Hubei Saning Chemical Co., Ltd. said: “M&A is a model of enterprise development, especially for listed companies. It is a good theme and transformation point. However, mergers and acquisitions also require a certain cost, not only It is the cost of capital, as well as the cost of technology and management. If technology and management are not in place, it is difficult to revitalize after mergers and acquisitions, which will affect the operational efficiency of the company itself. The related industries of fertilizer companies are for faster transformation, but to enter In unfamiliar areas, if the degree of association is not high, it is difficult to make a performance."

Mao Guobin stressed: "Minerals in the fertilizer industry should focus on mergers and acquisitions in the same industry, but it is not a good time. The industry as a whole has a state of overcapacity. There are many small enterprises with backward technology and low environmental protection investment. Only through the elimination of backward production capacity through the market, If a company with technology and cost advantages integrates mergers and acquisitions, the industry will develop. If it is blindly acquired during the downturn, it may just be a change of living method."

Whether it is optimistic or bad, Red Sun Akon has come to the market with a new look. Whether it is willing or not, the prelude to a large-scale integration of the agricultural asset industry will be opened up.

Two forces to accelerate the integration of the industry, can we optimize resources?

M&A between Chinese agricultural companies is not news, and the acquisition of such iconic companies as Red Sun Akon can trigger strong repercussions. Some insiders believe that in recent years, the “big move” mergers and acquisitions in the industry are few, and the agricultural enterprises that are in the downturn of the industry have also become more sensitive to the topic of mergers and acquisitions. The relevant person in charge of the large-scale phosphate fertilizer enterprises in Southwest China said in an interview that the industry development will not stop and capital operation will not stop. The silence of a period is a precursor to more intense changes.

In this regard, Chen Guoqing, general manager of Zhongyan Anhui Red Sifang Fertilizer Co., Ltd. said: “When focusing on industry mergers and acquisitions, there are two key points to pay special attention to. One is to clearly integrate the objectives, and the other is to use macro policies and market power. ""