China National Chemical Corp (ChemChina) and two US private equity firms have agreed to pay A$3 billion ($2.75 billion) in cash for Australia's Nufarm Ltd, a deal that would form the world's largest supplier of generic farm chemicals.

ChemChina is the first State-owned Chinese company to team up with buyout firms Blackstone Group and Fox Paine Management for an overseas acquisition. Buying Nufarm gives ChemChina entry to the $36 billion global market for herbicides and pesticides as a worldwide agricultural boom spurs acquisitions.

Under the offer, Nufarm's management team would continue to manage the combined operations of Nufarm and ChemChina.

Nufarm said it would recommend shareholders vote for the offer, if there is no better current offer and after an independent expert's report, but added that it was subject to a number of conditions and there was no certainty it would result in a formal bid.

Any takeover would need the support of Nufarm CEO Doug Rathbone, who owns 17 percent of the company, and the Goodfellow family in New Zealand, whose affiliates together own about 10 percent.

TV plant

Tsinghua Tongfang Co Ltd will invest 4 billion yuan to build a manufacturing plant for flat screen televisions and related components in Shenyang, Northeast China's Liaoning Province, the Beijing-based company said in a statement last week.

Tsinghua Tongfang, which before focused on personal computers and IT services, is another of the new players attracted to the booming digital TV market in China.

Tsinghua Tongfang has begun operation of the first-phase 500 million yuan facility in Shenyang. The company will produce LCD (liquid crystal display) TVs, PDP (plasma display panel) TVs and components at the plant.

The company plans to manufacture one million units annually in the first phase and will increase production to three million after the third phase of construction is completed, according to Wang Lianghai, Tsinghua Tongfang's assistant to the president in charge of the company's digital TV business.

Merger with sister firms

Panzhihua New Steel and Vanadium Co will merge with two sister firms and issue shares to buy core assets from its parent, heading for a group listing, the company said last week.

The Shenzhen-listed Chinese steel maker will issue additional shares to swap stock in Chongqing Titanium Industry and Sichuan Changcheng Special Steel and then delist them, according to a stock exchange filing.

The assets to be purchased from the parent include steel, as well as vanadium, titanium and mining operations.

The asset purchase from the parent group and affiliates is expected to help increase Panzhihua New Steel's 2007 earnings by 10 percent or more, according to Yang Baofeng, metals analyst at Orient Securities in Shanghai.

"Panzhihua New Steel will become an integrated firm with businesses ranging from mining, steel to titanium and vanadium, giving it a solid earnings outlook," Yang said.

Microfinance company

MicroCred Nanchong, the first wholly foreign-invested company in China offering microfinance services, has started trial operation in Nanchong, Southwest China's Sichuan Province.

The bank with an aggregate investment of 55 million yuan from MicroCred SA of France, International Finance Corporation, FW Bankengruppe of Germany and American International Group, targets small firms, rural households and self-employed businessmen.

Its financial services range from credit loans to secured loans to mortgage loans. The loans vary between 5,000 yuan and 75,000 yuan at a monthly interest rate of 1.1 percent. The minimum loan period is three months while the maximum is 18 months.

MicroCred Nanchong sources said that its financial services were not available to individuals. More outlets and services were possible if the trial operation went smoothly.

As the unprecedented business model is still new, MicroCred Nanchong is not allowed to take deposits and has yet to acquire the license required for financial institutions. The Nanchong Bureau of the China Banking Regulatory Commission, however, is responsible to guide and supervise its operation.

Office in Jordan

China Development Bank (CDB) will set up an office in Jordan in order to benefit from booming trade ties with the Middle Eastern country, Jordan Investment Board CEO Maen Nsour said in Beijing recently.

Bilateral trade reached $1 billion last year and is expected to increase further, said Nsour. As the CDB, which provides financial support for infrastructure development in China, is now planning to open an office in Jordan, the Jordan Investment Board has also set up an office in Beijing, its fourth outside the country.

Around 20 Chinese companies, employing around 30,000 staff, are now operating in Jordan. Haier, China's biggest manufacturer of household appliances, has a factory there that supplies the Middle Eastern market.

ZTE, one of China's biggest telecommunications equipment vendors, is also negotiating with Jordanian government agencies to establish a manufacturing plant to serve the local market, Nsour said. Jordan mainly exports chemicals, leather and agricultural products to China, and imports chemical products and machinery from the country.

Bilateral trade has developed rapidly since an agreement on trade and investment promotion between the two countries was signed in 2001.

Dairy stake

Shanghai Industrial Holdings Ltd has agreed to pay 477 million yuan to acquire another 10 percent in China Bright Dairy and Food Co Ltd.

Shanghai Industrial will buy the stake from Danone Asia Pte Ltd and lift its total share in the nation's third-largest dairy maker to 35 percent, the company said in its statement filed with the Hong Kong stock exchange last week.

After the sale, Shanghai Industrial and Shanghai Dairy Group will both own 35 percent of China Bright.

The move came one month after Danone announced plans to pull back from China Bright as earlier proposals to increase its holdings in the firm were less likely to be approved.

Danone and Bright set up a 50-50 yogurt joint venture in 1992. The joint venture underwent a stake diversification reshuffle and went public in 2000.

The French dairy goods maker also has a joint venture with China's biggest milk producer, China Mengniu Dairy Co, to make yogurt and has an interest in China Huiyuan Juice Group. A joint venture with Chinese beverage maker Wahaha Group has been dogged by disputes over ownership and management issues.

(China Daily 11/12/2007 page6)