Sinochem deal to form rubber giant

CHINA’S Sinochem has offered to buy Singapore’s Halcyon Agri in a deal that would create the world’s largest natural rubber company with combined revenues of US$2.3bn.

Continuing China’s purchase of overseas commodity interests, Sinochem has bid around S$450m (US$329m) for Halcyon Agri, which runs 14 rubber processing plants in Indonesia and Malaysia, with a production capacity of 748,000 t/y.

If the merger is successful, Halcyon will then purchase GMG Global, a Singapore-based natural rubber producer, majority-owned by Sinochem, and absorb the Chinese chemical major’s natural rubber processing assets. The combined company would have 35 processing facilities across Indonesia, Thailand, Malaysia, China and Africa, with a total processing capacity of around 1.5m t/y.

“The proposed merger will create a world leading global natural rubber enterprise, with market leading competency in each part of the supply chain including plantation, processing and distribution,” the companies said in a statement. The deal would increase the total rubber plantation land held by Halcyon Agri by more than 21 times to more than 153,000 hectares.

Halcyon will benefit from much greater access to Chinese demand for rubber, accounting for 4.8m t in 2015 or 39% of global demand, the companies said.

Chinese companies have been encouraged to buy into overseas commodity players to help secure access to supplies. Last year ChemChina bought Italian tyre manufacturer Pirelli for US$7.7bn.