On April 9, Wanhua Chemical announced that the “acquisition of shares of Yantai Juli Fine Chemical Co., LTD.” had been approved by the State Administration for Market Regulation. Wanhua Chemical would acquire the controlling shares of Yantai Juli and the State Administration for Market Regulation agreed to additional restrictive conditions for the concentration of operators.
Yantai Juli is mainly engaged in the production and sales of TDI. Yantai Juli and its wholly-owned subsidiary Xinjiang Heshan Juli have a nominal production capacity of 230,000 tons/year of TDI. Through this acquisition, Wanhua Chemical’s TDI production capacity in China will be further increased from 35-40% to 45-50%, and the main competitors in the domestic market will be changed from 6 to 5, and the domestic TDI competition pattern will continue to optimize. At the same time, if the 250,000 tons/year TDI project under construction in Fujian is taken into account, the total nominal capacity of the company will reach 1.03 million tons/year (including the TDI capacity of Juli), accounting for 28% in the world, ranking the first in the world, with significant advantages in scale.
By the end of 2022, the consolidated statement of Yantai Juli had total assets of 5.339 billion yuan, net assets of 1.726 billion yuan, and revenue of 2.252 billion yuan in 2022 (unaudited). The company has 80,000 tons of TDI and supporting production capacity of gas and nitric acid in Yantai (which has been stopped); Xinjiang mainly has 150,000 tons/year of TDI, 450,000 tons/year of hydrochloric acid, 280,000 tons/year of liquid chlorine, 177,000 tons/year of dinitrotoluene, 115,000 tons/year of diaminotoluene, 182,000 tons/year of carbyl chloride, 190,000 tons/year of concentrated sulfuric acid, 280,000 tons/year of nitric acid, 100,000 tons/year of sodium hydroxide, 48,000 tons/year of ammonia and other production capacity. In August 2021, Ningbo Zhongdeng, Wanhua Chemical’s employee shareholding platform, signed an agreement with Xinjiang and Shandong Xu Investment Management Center (limited partnership) to transfer 20% shares of Yantai Juli with RMB 596 million; In July 2022 and March 2023, Wanhua Chemical signed share transfer agreements with Xinjiang and Shandong Xu Investment Management Center (limited partnership) respectively, intending to transfer 40.79% shares and 7.02% shares of Yantai Juli. All the above shares are successfully transferred, and the company and the concerted action persons will obtain 67.81% of the shares of Yantai Juli and the controlling shares of Yantai Juli. Meanwhile, Wanhua Chemical intends to continue to purchase the remaining unacquired shares of Yantai Juli. The acquisition plan is of great significance to the future development of Wanhua Chemical. On the one hand, it will help the company actively implement the national western development strategy proposed by the central government and realize the industrial layout of the company in the northwest region. On the other hand, it will help the company implement the “Belt and Road” Initiative and better serve the countries along the “Belt and Road”.
Wanhua Chemical plans to acquire Yantai Juli equity and obtain Yantai Juli alone. Yantai Juli holds 100% equity of Xinjiang and Shan Juli Chemical. At present, the 400,000 tons/year MDI projects planned by Xinjiang and Shanjuli Chemical Planning have obtained the approval or opinions of relevant departments such as land use, planning site selection, environmental assessment, stable evaluation, energy conservation and other relevant departments; in January 2020, the development and reform of the Xinjiang Uygur Autonomous Region development and reform The committee was publicized before the project was approved; at the same time, the project had been included in the project list in 2023 in the autonomous region. If the acquisition is completed, Wanhua Chemistry is expected to obtain the renewal of the project and build a new MDI production base in Xinjiang to achieve better coverage of customers in western my country and China and Western Asia.
The additional restrictions that the State Administration of Market Supervision and Administration agree with the concentration of operators are:
1. Under the circumstances of equivalent trading conditions, the average price of annual average prices of the annual price of toluene diisocyanate to customers in China after the transaction is completed is not higher than the average price before the promise date (March 30, 2023). If the price of the main raw materials decreases to a certain extent, the price of providing toluene diisocyanate to customers in China should be properly reduced fairly and reasonably.
2.Unless there are proper reasons, maintain or expand the yield of toluene diisocyanate in China after the delivery is completed, and continue to develop innovation.
3. In accordance with the principles of fairness, reasonable, and discriminatory discrimination, customers in China will supply toluene diisocyanate to customers in China. Unless there is a legitimate reason, it must not refuse, restrict or delay products to supply products to customers in China; it shall not reduce the supply quality and service level of customers in Chinese markets; under the same conditions, except for reasonable business practices, it is not allowed to treat the domestic market in China. Customers implement differential treatment.
4. Unless there is a legitimate reason, it is not allowed to force the purchases of toluene diisocyanate products or sell them in the market of customers in China.
5. The above -mentioned restrictive conditions have been concentrated since the date of transaction and delivery. The State Administration of Market Supervision will make a decision to be lifted in accordance with the application and the market competition. Without the approval of the General Administration of Market Supervision, the entity shall continue to perform restricted conditions after centralization.
Post time: Apr-18-2023