Change of Control | CR Double Crane Acquires 23.5% Stake in Lier Chemical at a Premium

On August 4, the market focused on a major capital event, as the leading pesticide company Lier Chemical underwent a change in control. CRP Double Crane plans to spend 5.656 billion yuan to acquire a total of 23.5% equity in Lier Chemical, with the counterparties being Jiuyuan Group and Sichuan Chemical Materials Technology (an entity of the China Academy of Engineering Physics system).

According to the transaction plan, CRP Double Crane will acquire 20% equity held by Jiuyuan Group and 3.5% equity held by Sichuan Chemical Materials Technology, at a transfer price of 30.07 yuan per share, with a total transaction consideration of 5.656 billion yuan, representing a significant premium over the trading price. Upon completion of the transaction, CRP Double Crane will obtain control of Lier Chemical, and the actual controller of the listed company will change from CAEP to China Resources.

This merger is an important strategic layout for a central state-owned enterprise. As a pharmaceutical platform under China Resources Group, CRP Double Crane continues to increase its investment in the synthetic biology track, having established a synthetic biology research institute and reserved multiple pipelines for agricultural and veterinary drugs and bio-based new materials, but lacks a large-scale industrialization carrier; Lier Chemical is a domestic leader in glufosinate and chloropyridine pesticides, possessing complete chemical manufacturing bases as well as pilot and mass production capabilities for synthetic biology. The synergy between the two parties is clear: Lier Chemical's mature production platform can undertake the implementation of CRP Double Crane's synthetic biology technology, while the financial and technical resources of the China Resources system will also empower Lier Chemical to upgrade its agrochemical products and expand its bio-manufacturing business.

This equity transfer stems from CAEP's optimization of the layout of state-owned capital, divesting operating industrial assets to concentrate efforts on deepening its main scientific research business. Currently, the transaction still needs to go through multiple processes such as state-owned asset approval, anti-monopoly review of concentration of undertakings, and exchange compliance confirmation, and there is uncertainty. The market generally believes that this cross-border entry of a pharmaceutical central enterprise into a leading agrochemical company will promote the deep integration of the two major tracks of pesticides and synthetic biology, accelerating the industrialization process of bio-manufacturing technology.