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On 6 March, Zhongnongfa Seed Industry Group Ltd. (Zhongnongfa Seed) published a notice about the update of the sale of the 67% shares of Zhongnongfa Henan Agrochemical Co., Ltd. (Henan Agrochemical). In detail, by 1 March, 2018, no transferre party had appeared. To finish the transfer, Zhongnongfa Seed had decided to lower the bottom price by 10% and list it with the price of USD42.6 million on 5 March.
Since the second half of 2014, Zhongnongfa Seed has been planning to acquire Henan Agrochemical. According to the notice back then, Henan Agrochemical is mainly engaged in the R&D, production and sale of herbicide technical and intermediates and it is one of the largest producers of amide herbicide technical and its intermediates in the domestic market. Because of this, Zhongnongfa Seed hoped to forge its own pesticide sector and develop it with its current seed and fertilizer sectors. In the report released in Oct. 2015, the value of the 67% shares of Henan Agrochemical was estimated at USD59.9 million by professional evaluation institution.
On 30 Sept., 2017, Zhongnongfa Seed announced that the performance of Henan Agrochemical was far from expectation with failure to achieve its promised performance for two consecutive years. Later, it predicted that the company couldn’t finish its performance promise either. On 12 Oct., 2017, it published a notice saying that upon the reception of the inquiry letter from the Shanghai Stock Exchange Market, it had to illustrate the reasons behind the failure. It explained that the reasons were the gloomy macro-economy in recent years, the increasing pressure from safety supervision and management, the insufficient demand from downstream, the weak overseas market and the unsuccessful launch of some products.
Ever since Henan Agrochemical’s failure to fulfill its promises, Zhongnongfa Seed had proposed to sell the 67% shares of Henan Agrochemical since Sept. 2017 with the price of USD47.4 million. If 10% is cut down this time, the price will be around USD15.8 million when the transaction is successful.