Mega-Fusion The World’s Largest Chemical Company — Made in China
Both the Chinese chemical companies Sinochem and Chemchina are planning a fusion. With an annual turnover of around 100 billion Dollars, the recently emerged chemical giant would supersede the present industry leader BASF.
Würzburg – There is something brewing in the Middle Kingdom. Both the government-controlled chemical companies Chemchina and Sinochem are apparently fiddling about with a common future. This fusion could lead to the emergence of world’s largest chemical company, which would outstrip even BASF with a turnover of approximately 100 billion Dollars. The German chemical giant would be under immense pressure due to the merger of Chinese companies and should be worried about its market leadership in some areas.
The margin would be another advantage, which the Chinese company shall have against the German company. While the Asians are working with a five-year plan and the government is content with the relatively moderate values, the Ludwigshafen-based company has to meet the expectations of its shareholders.
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Forthcoming Syngenta takeover by Chemchina is probably also an important factor for the fusion. The Chinese company would take over the Swiss agro-chemical group for around 43 billion Dollars. In the near future, doubts regarding the financial resources of Chemchina were emerging, which shall be put to rest by the fusion with Sinochem. After the announced deals of Bayer with Monsanto and Dow with Dupont, the pressure in Ludwigshafen could gradually build up. A way of responding to that would be purchasing segments, which will emerge as a result of fusion of other companies.