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ChemChina deals boost its profile
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08:55, October 31, 2008

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In October, China National Bluestar Group Corp (Bluestar) completed a stake transfer with Blackstone Group, in which the US private equity firm paid $600 million for a 20 percent stake.

The deal, which drew a lot of attention last year, is the first time that a State-owned company has invited a foreign company to be a strategic investor.

Bluestar was founded 24 years ago as a major manufacturer of new materials and specialty chemical products. It is a subsidiary of China National Chemical Corp (ChemChina), the country's leading chemicals manufacturer.

ChemChina was established in 2004. It was formed following the restructuring of several enterprises under the former Ministry of Chemical Industry.

Analysts said the Blackstone deal can help ChemChina improve its technology and management level, which will make the company more multinational.

Overseas development

Today, overseas development has become a key driver for ChemChina's future, said Ren Jianxin, chairman of the company.

In 2006 ChemChina acquired Adisseo Group, a French company that is a leading global animal nutrition feed firm specializing in producing methionine, vitamins and biological enzymes. Methionine is an amino acid that helps prevent the build-up of fat in the arteries and is also used to treat depression, arthritis and chronic liver disease.

In the same year, ChemChina bought another French company, Rhodia's organic silicon business, including its patents, manufacturing equipment and distribution channels, as well as the company's sulphide business.

With the two acquisitions, ChemChina became the Chinese company with the largest investment in France.

"The two deals clearly identify our business focus to be a leading company in new materials and specialty chemical products," said Ren.

In the global market, Adisseo's methionine products account for around 30 percent. China's market for the products is growing 10 percent year-on-year. After the purchase ChemChina greatly improved its manufacturing capacity, making itself one top manufacturer of methionine products.

Similarly, the Rhodia acquisition upgraded ChemChina's organic silicon business, making the company the third largest producer in the world. Before that ChemChina only had advantages in the upstream sector of organic silicon production.

"In order to achieve overseas development, a company can have lots of options. For example, you can form cooperation agreements with foreign companies, you can also open plants overseas," Ren said.

"But for our company, I think the best choice is to make acquisitions. Through mergers and acquisitions we can have larger markets, get more advanced technology, as well as bring in more talent."

"All our past deals have proved to be successful. We will continue to talk with some foreign companies about investment opportunities," said Ren.

Source: China Daily



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