China National Chemical Corporation (ChemChina),
one of the leading producers of chemical products in China, is
expected to invest US$8.93 billion into a project in Cangzhou,
north China's Hebei Province.
ChemChina has agreed to take part in Hebei Cangzhou Dahua Co Ltd
by buying a 60 percent stake in its parent company, Cangzhou Dahua
Group, according to a statement released to the Shanghai stock
exchange on Wednesday.
By the end of 2011, ChemChina will invest a total of 72 billion
yuan (US$8.93 billion) to build Cangzhou Dahua into one of its
chemicals production bases, the statement said.
"The acquisition of Cangzhou Dahua will help ChemChina
strengthen its presence in the petrochemical products business,
which is also known as the downstream business," said Li Guohong,
an analyst from China Galaxy Securities.
"The business integration will help the company reduce the
impact which higher crude oil prices have caused," said Li.
Along with the price hike of crude oil, the production cost of
oil refining enterprises climbed and economic profit decreased
Shares of Cangzhou Dahua yesterday went up 8.06 percent to 6.7
yuan (83 US cents) in the Shanghai Stock Exchange.
Li said, followed by its domestic rival Petrochina and Sinopec,
the acquisition is an important step in the expansion of
Recently several State-owned flagship companies have quickened
their step in the expansion. On Wednesday, Asia's largest oil
refiner Sinopec paid 14.3 billion yuan (US$1.78 billion) in cash to
buy back its four listed subsidiaries.
PetroChina bought back all the public shares of its three listed
subsidiaries based in Northeast China at the end of last year.
Li said being smaller than Petrochina and Sinopec, ChemChina is
actually quickening its expansion pace.
Earlier this year, ChemChina bought the stake in Qingdao Yellow
Sea Rubber Company Limited. ChemChina plans to develop the latter
into its rubber production base.
In January, ChemChina's subsidiary, China National BlueStar
Group Corporation took over Adisseo Group, the largest animal
nutrition supplement producer in the world. It is the first case of
a Chinese enterprise acquiring an overseas firm in the field.
(China Daily February 17, 2006)