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U.S. IPO to Help Chemical Maker Adama Fund China Growth

Adama Agricultural Solutions Ltd., the world’s largest maker of generic agro-chemicals, will use funds from its U.S. initial public offering to expand in China, Chief Executive officer Chen Lichtenstein said.

Adama, which is 60 percent-owned by an unit of China National Chemical Corp. known as ChemChina, is in talks to acquire companies from its majority owner, Lichtenstein said in a telephone interview on Aug. 13. The company proposes to sell shares on the New York Stock Exchange or Nasdaq worth $300 million, according to a draft prospectus filed to the Securities and Exchange Commission on Aug. 11.

“One of the only holes in our geographic presence is China,” Lichtenstein said from the company’s Airport City headquarters near Tel Aviv. “With the acquisition of the businesses we intend to create a significant marketing and operational presence,” in the country, he said.

China is becoming one of the biggest global producers of agricultural chemicals, Adama, formerly named Makhteshim-Agan Industries Ltd., said in the SEC filing. Since ChemChina bought its stake in October 2011, Adama has sought to increase its business in emerging markets, from where much of the industry’s growth is expected to come, it said.

Operational Hubs

Lichtenstein said he hopes three or four acquisitions will be agreed in the next three months that may close in the first half of 2015.

“We will have two major operational hubs, one in China and one in Israel” if the deals are completed, he said.

The amount raised in the planned IPO may change, according to Lichtenstein. The $300m figure mentioned in the filing is “purely technincal” and the board has not decided how much to raise, he said. The listing is expected to take place by year-end or early in 2015, he said.

Adama posted a 23 percent jump in profit to $59.5 million in the second quarter from a year earlier, and a 9 percent rise in revenue to $876 million, according to data compiled by Bloomberg.

Proceeds from the IPO will also be used to lower leverage and for investments, Lichtenstein said. As of the end of June, the company had outstanding debt of $1.96 billion, according to the filing.

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