CCM: Nantong Jianshan suspends acquiring Jiangsu Changlong and Changlong Agrochemicals 08-31-2016

On 27 April, 2016, Nantong Jiangshan Agrochemical & Chemical Co., Ltd. (Nantong Jiangshan) announced to suspend the major assets reorganization and promised that it will no longer conduct any assets reorganizations within 6 months from the day when it held a meeting to explain to investors. It is known that the meeting was ended on 29 April, 2016.

                                                                                          Source: Baidu

"We have kept advancing the assets reorganization since we started it, however, we finally cannot come to an agreement with the counterparty – Shenzhen Noposion Agrochemicals Co., Ltd. (Shenzhen Noposion) on related core clauses in the transaction," disclosed Nantong Jiangshan. "What's more, there is no result about the environmental pollution in Changzhou Foreign Languages School. So Nantong Jiangshan and Shenzhen Noposion all agreed to terminate the Framework Agreement on the Major Assets Reorganization," Nantong Jiangshan added.

Since Sept. 2015, many teachers and students of Changzhou Foreign Languages School have felt ill. It was widely believed that the dispersion of pollutants under the ground near the school was the major reason. And this area is the former location of Jiangsu Changlong Chemical Co., Ltd. (Jiangsu Changlong) and other three chemical enterprises.

Nantong Jianshan's stock has been suspended since 28 Dec., 2015 for the major assets reorganization plan and the company started to conduct the reorganization on 12 Jan., 2016. In detail, Nantong Jiangshan planned to acquire 80% of Jiangsu Changlong and 35% of Jiangsu Changlong Agrochemicals Co., Ltd. (Changlong Agrochemicals) by issuing shares and at the same time planned to raise supporting funds by issuing shares to no more than 10 designated investors privately.

Changlong Agrochemicals is mainly engaged in producing pesticide TC and phosgenated products and Jiangsu Changlong is mainly engaged in producing pesticide formulations and intermediates.

Changlong Agrochemicals has large production capacify for pesticide TC, including 50,000 t/a amide pesticides, 8,000 t/a carbamate pesticides, 5,000 t/a heterocyclic pesticides, 3,000 t/a urea pesticides, 2,500 t/a nicotinic pesticides, 2,000 t/a pyrethroid pesticides and 1,000 t/a diafenthiuron pesticides.

Furthermore, Changlong Agrochemicals has more than 60 pesticide TC and more than 70 formulation varieties covering insecticides, fungicides and herbicides.

Although Nantong Jiangshan also has large production capacity for pesticide TC (organophosphorus pesticide  TC: 90,000 t/a; amide pesticide TC: 18,000 t/a), it only has 15 varieties for pesticide TC (glyphosate, dichlorvos, trichlorfon, butachlor and acetochlor) and 39 varieties for formulations (mainly the above-mentioned five). Therefore, if Nantong Jiangshan can successfully acquire these two companies, it can better enrich its product line.

Changlong Agrochemicals is a subsidiary of Jiangsu Changlong. According to the disclosed financial data, Changlong Agrochemicals performed well in the past few years.

From 2011 to 2015, its total revenue was USD191.32 million (RMB1.24 billion), USD232.74 million (RMB1.50 billion), USD266.36 million (RMB1.72 billion), USD245.09 million (RMB1.58 billion) and USD184.68 million (RMB1.19 billion) respectively; and the net profit was USD4.04 million (RMB26.07 million), USD11.45 million (RMB73.95 million), USD6.46 million (RMB41.73 million), -USD14.46 million (-RMB93.97 million) and USD6.77 million (RMB43.71 million).

In 2011, 2012, 2013, and 2015, the company's net profit margin was 2.11%, 4.92%, 2.43% and 3.67% separately. As the net profit margin of China's pesticide industry is 2%-8%, Changlong Agrochemicals's net profit margin remained at a normal level.

Notably, Changlong Agrochemicals suffered from a net loss in 2014 mainly because it paid a compensation of USD12.81 million (RMB82.70 million) for the environmental case and a court acceptance fee of USD140,000 (RMB910,600). Fortunately, the huge compensation did not obviously affect the net profit the company made in 2015.

In view of Changlong Agrochemicals's operating conditions, if Nantong Jiangshan smoothly conducts this assets reorganization, it can rapidly expand the sales scale of pesticides and improve its position in the industry. What's more, the company's market can be extended, comprehensive cost of sales can be reduced, and finally the overall profitability will be increased by concentrating, adjusting and optimizing the resources.


This article comes from Glyphosate China Monthly Report 1605, CCM


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.


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Tag: glyphosate  insecticides  pesticide


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