Stock Code: 000553 (200553) Stock Abbreviation: ADAMA A(B) Announcement No. 2019-54
ADAMA Ltd.
Announcement on the Acquisition of 50% of the Equity Interests in
Shanghai Dibai Plant Protection Co., Ltd.
The Company and all members of the Company’s Board of Directors confirm that all
information disclosed herein is true, accurate and complete, with no false or
misleading statement or material omission.
Please be aware:
1. In this Transaction (as defined below), the estimated purchase price of 50% of
the equity interests in Shanghai Dibai Plant Protection Co., Ltd. (“Dibai” or “Target
Company”) after completion of its Restructuring (as defined below) (“Target
Equities”) shall be RMB 370 million, and the final purchase price shall be determined
based on the net debt of Dibai at Closing Date (as defined below) in accordance with
the EPA (as defined below), and is subject to the appraisal report on the Target
Equities (as defined below) duly filed with the government entities to the ADAMA
Ltd. (“Company”) in charge of supervision and administration of state-owned assets
or authorized entities (“Government Entities”) (“Appraisal Report”).
2. This Transaction requires further approval of the Government Entities.
3. Required government review from the perspective of anti-trust law in relation
to this Transaction shall be completed.
4. This Transaction shall further be approved by the shareholders meeting of
Jiangsu Huifeng Agrochemical Co., Ltd. (“Huifeng”).
I. Overvie w of the Transaction
1. On January 10, 2019, the Company and Huifeng signed the Memorandum of
Understanding on the Acquisition of Certain Assets (“Memorandum of
Understanding”), which has been publicly announced by the Company on the website
http://www.cninfo.com.cn on January 11, 2019 (Announcement No.: 2019-5). As an
important implementation step of the Memorandum of Understanding, the Company
executed Equity Purchase Agreement (“EPA”) with Huifeng on November 6, 2019,
according to which the Company intends to acquire the Target Equities after
completion of the Restructuring and the Company agrees to purchase the Target
Equities for an estimated purchase price of RMB 370 million. The final purchase
price shall be determined based on the net debt of Dibai at Closing Date in accordance
with the EPA, and is subject to the Appraisal Report (“Transaction”). Following the
completion of this Transaction, the Company will hold 50% of the equity interests in
reorganized Dibai.
2. On November 5, 2019, the 18th Meeting of the 8th session of the Board of
Directors of the Company approved the Proposal and Context of on the Acquisition of
50% of the Equity Interests in Shanghai Dibai Plant Protection Co., Ltd., the domestic
distribution arm of Jiangsu Huifeng Agrochemical Co., Ltd. Among the five directors
of the Company, there were five affirmative votes, zero negative votes and zero
abstentions. The Transaction is within the approval line of the Board of Directors and
is not subject to the approval of the shareholders.
3. This Transaction does neither constitute a related-party transaction nor a
material asset restructuring as stipulated by the Administrative Measures on
Significant Asset Restructuring of Listed Companies.
4. The Appraisal Report on the Target Equities of this Transaction shall be duly
filed with the Government Entities.
5. This Transaction requires further approval of the Government Entities.
6. Required government review from the perspective of anti-trust law in relation
to this Transaction shall be completed.
7. This Transaction shall further be approved by the shareholders meeting of
Huifeng.
8. The Company will timely disclose the relevant information according to the
progress of this Transaction.
II. Basic Information of the Counte rparty
1. Company Name: Jiangsu Huifeng Agrochemical Co., Ltd.
2. Nature of Enterprise: Joint stock limited company (Listed, invested or
controlled by natural individual)
3. Date of Establishment: May 26, 1989
4. Registered Capital: RMB 1,507,475,283
5. Legal Representative: Zhong Hangen
6. Unified Social Credit Code: 913209001407071551
7. Registered Address: South of Wanggangzha, Dafeng District, Yancheng City,
Jiangsu Province
8. Business Scope: Crop planting; producing pesticides and hazardous chemicals
(in accordance with safety permission opinions of establishment of construction
project of hazardous chemical and approval opinions of environmental impact report);
technical consultation and service of insecticides, bactericides, BZQ and herbicides;
sales of chemical products (excluding pesticides and other hazardous chemicals), knit
goods, hardware, electric materials, daily groceries, daily necessities, woods, building
materials, electronic computers and accessories and agricultural products (excluding
non-packaged seeds); production and sales of wrapper (including plastic products and
excluding hazardous chemicals); business of self-produced products by the company
and its member companies and export business of relevant technologies;
self- management and agency of import and export of all kinds of goods and
technologies and domestic trade. (any business which legally requires approval(s)
shall be conducted after obtaining the approvals issued by relevant authorities.)
9. Material Shareholders:
No. Shareholder’s name Holding percentage
1. Zhong Hangen 42.43%
2. Zhong Yurong 4.82%
10. Related-party Relationship: Huifeng is not a related party of the Company,
and there is no other relationship relating to property rights, businesses, assets or
employees between Huifeng and the Company (and its top 10 shareholders) that may
or has created any preferential interests.
There exist business relationships between the Company and Huifeng: The
Company purchases pesticide active ingredients and pesticide formulations from
Huifeng, including fungicides, insecticides, herbicides and plant growth regulators,
etc.
11. Credit Status: According to a search conducted on the website of publication
of enforcement information in China, Huifeng is not a dishonest party subject to any
judicial enforcement.
III. Basic Information of the Target Asset
1. Overview of the Target Asset
(1). Target Asset: 50% of the equity interests in the reorganized Dibai
(2). Asset Category: Equity investment
(3). Encumbrance: No mortgage, pledge or any other third-party claim on the Target
Equities. The transferred equity is not involved in any major disputes, lawsuits,
arbitrations, freeze or other judicial measures.
2. Overview of the Target Company
(1). Company Name: Shanghai Dibai Plant Protection Co., Ltd.
(2). Nature of Enterprise: Limited liability company (Invested by natural
individual or controlled by legal person)
(3). Date of Establishment: September 17, 2001
(4). Registered Capital: RMB 10 million
(5). Legal Representative: Pei Binbin
(6). Unified Social Credit Code: 91310114703454316Y
(7). Registered Address: Room 217, 218, No.2 Building, No.51 Xinpei Road,
Jiading District, Shanghai
(8). Business Scope: Sale of chemical products (excluding hazardous chemicals,
supervised chemicals, fireworks, civic- use explosives, precursor chemicals), chemical
fertilizers, pesticides (excluding hazardous chemicals), imports and exports of goods
and technologies (any business which legally requires approval(s) shall be conducted
after obtaining the approvals issued by relevant authorities.)
(9). Shareholding Structure:
Shareholding structure of the Target Company before this Transaction was as
follows:
No. Shareholder’s name Holding percentage
1. Jiangsu Huifeng Agrochemical Co., Ltd. 100%
(10). Key Financial Figures of the Last Year And the Last Period:
(RMB (million))
As of July 31, 2019
As of December 31,
Key Financial Figures （January to July,
2018（FY 2018）
2019）
Total assets 167.4840 84.0401
Total liabilities 136.5847 64.5443
Total receivables 36.7216 65.1866
Total amount of contingency
(including lawsuits and 0 0
arbitrations)
Net assets 30.8993 19.4958
Revenues 535.7130 264.0149
Profits 75.5696 30.9323
Net profits 55.3334 23.1545
Net cash flows generated
41.5379 34.2538
from operating activities
Note: In order to indicate the operation condition of the Target Company accurately and
completely, the above financial figures are simulated and have not been audited assuming that the
Target Company has complete the Restructuring. The financial figures have include relevant
figures in relation to Dibai and Xinjiang Huifeng.
(11). Audit and Appraisal Report: The audit and appraisal with respect to the
Target Equities are under work, with a benchmark date of July 31, 2019. After the
completion of the above process, the Company will timely disclose the audit and
appraisal report according to the requirements under relevant laws and regulations.
(12). Credit Status: According to a search conducted on the website of
publication of enforcement information in China, Dibai is not a dishonest party
subject to any enforcement.
(13). Restriction: There is no restriction on the shareholders’ rights in the
Articles of Association and other relevant documents of Dibai other than which has
been stipulated in the applicable laws and regulations.
3. As one step of this Transaction, before Closing, the Restructuring shall be
completed by Huifeng, i.e. Huifeng shall acquire 49% of equity interests in Xinjiang
Huifeng Bio-Technology Co., Ltd. (“Xinjiang Huifeng”) from Xinjiang Huifeng’s
employee shareholders and then transfer 100% of equity interests in Xinjiang Huifeng
owned by it to Dibai after completion of the acquisition aforesaid. 100% of equity
interests in Xinjiang Huifeng will ultimately be held by Dibai. The basic information
of Xinjiang Huifeng is as follows:
(1). Company Name: Xinjiang Huifeng Bio-Technology Co., Ltd.
(2). Nature of Enterprise: Limited liability company (Invested or controlled by
natural individuals)
(3). Date of Establishment: July 3, 2013
(4). Registered Capital: RMB 5 million
(5). Legal Representative: Pei Binbin
(6). Unified Social Credit Code: 91650100072216310T
(7). Registered Address: 2F, No. 2 Part, No. 1 Building, No. 56 Dalian Road,
Economic Development Zone, Urumqi, Xinjiang Uygur Autonomous Region.
(8). Business Scope: Pesticide (No.1 item of the sixth category) (except
unauthorized dangerous chemicals and precursor chemicals, explosion prone
chemicals and toxic chemicals). Sales of fertilizer; development and promotion of the
bio-technology
(9). Shareholding Structure:
Shareholding structure of Xinjiang Huifeng before the commencement of the
Restructuring under this Transaction was as follows:
No. Shareholder’s name Holding percentage
1. Jiangsu Huifeng Agrochemical Co., Ltd. 51%
2. Guo Jing 46%
3. Wang Li 3%
(10). Credit Status: According to a search conducted on the website of
publication of enforcement information in China, Xinjiang Huifeng is not a dishonest
party subject to any enforcement.
(11). Restriction: There is no restriction on the shareholders’ rights in the
Articles of Association and other relevant documents of Xinjiang Huifeng other than
which has been stipulated in the applicable laws and regulations.
(12). Encumbrance: No mortgage, pledge or any other third-party claim on the
equity interest of Xinjiang Huifeng. The equity interest of Xinjiang Huifeng is not
involved in any major disputes, lawsuits, arbitrations, freeze or other judicia l measures.
IV. Key Terms of the Transaction Agreement
1. Parties: The Company (the Buyer); Huifeng (the Seller)
2. Target Formulation Products: Including existing formulation registrations and
new formulation registrations, excluding TDZ-series products for bio stimulant usage
and bio-agricultural sector related to micro-biotic-series products, but TDZ for
defoliants usage shall still be included.
3. Target Business: Domestic and export sales of the Target Formulation
Products.
4. Restructuring: The Company and Huifeng agree that, Huifeng will commence
restructuring in relation to the Target Business (“Restructuring”) after the Equity
Purchase Agreement enters into effect. The Restructuring mainly includes:
(1). Huifeng will acquire 49% of the equity interests in Xinjiang Huifeng owned
by its employee shareholders. After this acquisition, Huifeng will hold 100% of the
equity interests of Xinjiang Huifeng.
(2). After completion of the acquisition aforesaid, Huifeng will transfer 100% of
the equity interests of Xinjiang Huifeng to Dibai.
(3). Huifeng will transfer business relationships and employees in relation to the
Target Business to Dibai and/or Xinjiang Huifeng.
(4). Huifeng will transfer/license intellectual properties in relation to the Target
Business to Dibai and/or Xinjiang Huifeng.
(5). After completion of the Restructuring, Dibai will hold 100% of the equity
interests of Xinjiang Huifeng and the Target Business will be operated by Dibai
and/or Xinjiang Huifeng.
(6). After completion of the Restructuring, the Company will acquire the Target
Equities in cash.
5. Purchase Price: The estimated purchase price of the Target Equities shall be
RMB 370 million, with the final purchase price to be determined based on the net
debt of Dibai at Closing Date in accordance with the EPA, and is subject to the
Appraisal Report.
6. Pricing Basis: The Purchase Price has been determined by both parties with
mutual agreement and shall be subject to the Appraisal Report.
7. Payment: Cash payment
8. Source of the Payment: The Company’s own capital
9. Payment Arrangement:
(1). The Company shall pay RMB 30 million no later than five business days
after the approval by Huifeng’s shareholders meeting or the approval by the
Government Entities (whichever comes later). At the Closing Date, the Company
shall pay the remaining RMB 340 million, by way of paying RMB 310 million to
Huifeng and RMB 30 million to an escrow account opened in the name of Huifeng
(“Escrow Amount”).
(2). If during the period between the Closing Date and the first anniversary of the
Closing Date, both dates inclusive, all terms and conditions to release the Escrow
Amount set forth in the EPA have been met, 50% of the Escrow Amount will be
released on the tenth calendar day falling after the first anniversary of the Closing
Date. If during the period between the first anniversary of the Closing Date (excluding
such date) and the second anniversary of the Closing Date (including such date), all
terms and conditions to release the Escrow Amount set forth in the EPA have been
met, the balance of the Escrowed Amount will be released on the tenth calendar day
falling after the second anniversary of the Closing Date.
10. Material Closing Conditions:
(1). The Restructuring has been completed;
(2). Relevant approval of in relation to this Transaction has been duly obtained
and the Appraisal Report has been duly filed with Government Entities;
(3). Required government review from the perspective of anti- trust law shall be
completed;
(4). The resumption of Huifeng’s productions of active ingredients, the capacity
of which in a respective month can generate no less than 80% of the average monthly
production level of active ingredients for the Target Business in the EPA generated
from self-produced products in the financial year 2017. Huifeng shall provide all
government authorizations necessary for the lawful resumption and continuous
operation of the corresponding production lines, make public announcement on the
resumption and provide documents issued by government entities approving the
resumption.
(5). The execution by the parties of the definitive agreements (including without
limitation, an equity purchase agreement) in connection with the Extended
Transaction (as defined below).
11. Closing: The closing shall take place at the registered address of the
Company within five business days after the satisfaction or waiver of all the
conditions precedent set forth the EPA or at such other place or at such other time and
date as Huifeng and the Company may otherwise mutually agree in writing (“Closing
Date”).
12. Management of the Target Company after this Transaction: The Company
and Huifeng agree that commencing from the Closing Date, they will co- manage the
Target Company as shareholders, each holding 50% equity interest (after completion
of the Restructuring) and having the power to appoint the same number of directors.
The chairman of the board shall be selected from the board members appointed by
Huifeng and shall be the legal representative of the Target Company, the CEO and
CFO of the Target Company shall be nominated by the Company and appointed by
the Board of the Target Company. The Company will be responsible for setting the
Dibai’s commercial, marketing and branding direction.
13. Attribution of Economic Benefits During the Transition Period:
(1). The transition period of the Transaction shall commence from the
benchmark date (July 31, 2019) to the Closing Date (“Transition Period”).
(2). Before the benchmark date, all and any economic benefits, profits, interests
and losses generated by the Target Business corresponding to the Target Equity
Interest shall be attributed to Huifeng.
(3). During the Transaction Period, all and any economic benefits, profits and
interests generated by the Target Business corresponding to the Target Equities shall
be attributed to Huifeng, and all and any losses suffered by the Target Business
corresponding to the Target Equities shall be borne by Huifeng.
(4). After the Closing Date, all and any economic benefits, profits, interests and
losses generated by the Target Business corresponding to the Target Equity Interest
after shall be attributed to the Company.
14. Extended Transaction: The Company intends to acquire Huifeng’s
agrochemical business located at its main site in Dafeng, Jiangsu in accordance with
Memorandum of Understanding (announcement number:2019-5)(“Extended
Transaction”). At the Closing Date, the Company will pay RMB 20 million to
Huifeng as an upfront fee of the Extended Transaction.
15. Effectiveness: The Equity Purchase Agreement shall come into effect after
approval by Huifeng’s shareholders meeting and approval by the Government Entities,
whichever comes later.
16. Termination: The Equity Purchase Agreement will be terminated if the
closing conditions have not been achieved or have not been waived by either party
before February 29, 2019.
V. Other Arrangements in this Transaction
1. Employee Settlement: After completion of this Transaction, Dibai will keep
approximately 183 employees in relation to the Target Business, the remaining
employees of Dibai will be settled by Huifeng.
2. Land Lease: This Transaction does not include any land lease arrangement.
3. Potential Related-Party Transaction after Closing: Commencing from the
Closing Date,
(1). Huifeng and Dibai will be related parties of the Company;
(2). All Target Formulation Products supplied by Huifeng shall be sold and
distributed to Xinjiang HF through Dibai, or directly to Xinjiang Huifeng as per
Dibai’s requirements.
(3). All Target Formulation Products will be sold to external customers through
the Dibai or Xinjiang Huifeng, provided, however, Dibai will have the right to
reassign or transfer the right to sell or distribute certain Target Formulation Products
to affiliates of the Company or Huifeng, and the transaction shall be conducted at
arm’s length;
(4). Huifeng shall have a right of first refusal with respect to the supply to Dibai
and Xinjiang Huifeng. In the event that Huifeng is not able to satisfy Dibai and/or
Xinjiang Huifeng’s demand for the Target Formulation Products, the Company will
have a right of first refusal to supply Dibai and/or Xinjiang Huifeng such products
from itself or its subsidiaries.
(5). Certain formulation products that were produced by Huifeng and were
exclusively promoted by the Company with its own brand before completion of this
Transaction will still be produced by Huifeng and be sold to the Company through
Dibai after completion of this Transaction.
VI. Purpose of this Transaction and the Effects on the Company
Dibai has an attractive portfolio of formulated crop protection products,
comprised of more than 150 product registrations, as well as an experienced sales
team of 180 employees. Under the terms of the Transaction, Dibai will obtain the
exclusive, indefinite, royalty-free rights to license Huifeng’s existing and future
registrations in China, with all its sales of Target Formulated Products in China to be
conducted through Dibai (including Xinjiang Huifeng, as a subsidiary of Dibai) as
mentioned above .
VII. The commercial joint-venture’s strong commercial presence, numerous
differentiated, patented products and wide portfolio of product registrations are highly
complementary to the Company’s. This strategic commercial joint-venture is a
significant milestone in the Company’s ongoing, rapid expansion in China, and will
significantly bolster the Company’s commercial activities, positioning and offering in
this key crop protection market.Filling Documents
1. Equity Purchase Agreement；
2. Resolution of the 18th meeting of the 8th session of the Board of Directors of
the Company
It is hereby announced.
Board of Directors of the Company
November 7, 2019
