Chinese state-owned chemical companies Sinochem Group and ChemChina are in discussions about a possible merger to create a chemicals, fertilizer and oil giant with almost $100 billion in annual revenue, reports Reuters.
The deal was reportedly proposed by China’s central government. “The government has given the mandate to let Sinochem lead in this potential merger with ChemChina,” said a source.
The combination of the two Chinese rivals is part of a broader strategy by the regulatory body that oversees the country’s state assets to merge state-owned companies to create larger and stronger national champions, says FT.
The talks come as doubts have been raised in the Chinese media over the ability of ChemChina to close its acquisition of Syngenta, which would be China’s largest ever purchase of an overseas business.
Details of the deal weren’t immediately clear and the plan’s still subject to change, say sources.
The merger would change the landscape of China’s chemicals industry and add to the wave of consolidations the government has pushed under President Xi Jinping.