In the latest sign of China’s growing appetite for commodities assets, one of the country’s largest agricultural and chemicals companies is looking to buy a Singapore-listed global rubber trader.
Sinochem Group, China’s biggest seller of seeds and fertilizer, is in advanced talks to buy natural-rubber supply-chain manager Halcyon Agri Corp. in a deal valued at about $300 million, people with knowledge of the deal said. Halcyon has a market capitalization of about $260 million.
Sinochem, which would make the deal through its Sinochem International Corp. unit, is already one of the world’s largest rubber suppliers by production capacity.
Chinese companies have been snapping up commodities companies whose shares have been hit by downturns in prices for what they produce—drops caused by declining demand from China, in some cases. In recent years, Beijing has encouraged its biggest companies to look abroad to buy more parts of the global supply chain for commodities from oil to fertilizer needed to fuel the country’s economy. Acquisition stumbles by state oil companies, such as top offshore oil producer Cnooc Ltd.—which has had to deal with cost overruns and an oil spill at Canada’s Nexen Inc., bought for $15 billion in 2013—have made oil producers reluctant to take big bets overseas in the past year. But chemical and agricultural companies have stepped up in their place.
China National Chemical Corp., known as ChemChina, took control of Italy’s Pirelli & C. SpA last year in a deal that valued the tire maker at around $7.7 billion and provides China with better technology and a global sales network. ChemChina also has discussed picking up Swiss pesticide maker Syngenta AG in a $40 billion-plus deal, people familiar with the situation said earlier.
Sinochem, which competes with ChemChina in supplying high-end global tire companies, is likely to become a bigger player in China’s commodity push: Earlier this month, Beijing named noted deal maker Ning Gaoning as chairman. Mr. Ning, a flamboyant, American-educated Chinese who goes by “Frank” in English, led a string of big overseas deals during his time leading Chinese state-owned grains trader Cofco Corp. Last month, Cofco agreed to pay $750 million for commodities trader Noble Group Ltd.’s49% stake in agricultural joint venture Noble Agri. Cofco already had the other 51%, purchased in 2014 for $1.5 billion.
Sinochem may combine Halcyon Agri with earlier acquisitions to create a single rubber-production-and-sales operation with greater scale, one of the people familiar with the acquisition plan said. In 2008 Sinochem bought 51% of another Singapore-listed rubber company, GMG Global Ltd., and in 2010 its Singapore unit acquired Thai rubber company Teck Bee Hang Co. Halcyon Agri operates 14 rubber-processing facilities in Indonesia and Malaysia and distributes its products through a network of warehouses and sales offices in Southeast Asia, China, the U.S., and Europe.
In 2014, it had revenue of $479 million, more than double the prior year.
A deal could be completed by end of this month, one of the people said.
Sinochem didn’t immediately respond to a request for comment and Halcyon declined to comment. In a September filing to the Singapore Exchange, Halcyon said it was in talks with regarding a potential strategic transaction, but it didn’t specify the parties it was talking with.
As of 2014, Sinochem owned 80,000 hectares of natural-rubber plantation globally, and had 22 rubber processing plants in China, Thailand and West Africa with an annual processing capacity exceeding 700,000 tons.
