The recent acquisition by Stanley Agriculture Group Co., Ltd. (“Stanley,” Stock Code: 002588) of the controlling interests of Chengde Lihe River Fertilizer Co., Ltd. (“Lihe River Fertilizer” or the “Target Company”), by investing approximately RMB 244 million through its newly established, wholly owned subsidiary has closed. JunHe acted as Stanley’s legal advisor and provided legal services during the whole process of the acquisition.
Stanley is an integrated agricultural service provider and is engaged in the production and sale of compound fertilizer. It specializes in grain collection and storage, agricultural information consultancy, agricultural technology promotion and agricultural materials trade. It is a National Key High-Tech enterprise with total assets of approximately RMB 8 billion. It has an annual production capacity of 5.2 million tons, and the largest high tower compound fertilizer production base in China. Stanley’s six new types of fertilizers, including “synchronous slow-release fertilizer for rice production” and “high tower melt rotary granulation compound fertilizer” have been determined as “key new national products” by the Ministry of Information Technology, the Ministry of Commerce, the General Administration of Quality Supervision, and the Ministry of Environmental Protection. The “Stanley” branded compound fertilizer is one of the largest brands of national compound fertilizers and has been awarded many honors such as the “Chinese farmers’ favorable brand of agricultural materials” and an “excellent brand of the Chinese chemical industry.”
JunHe assisted Stanley to successfully list on the Shenzhen Stock Exchange in 2011 and has been the permanent legal advisor to assist Stanley in its development.
Lihe River Fertilizer (formerly Zunhua Municipal Fertilizer Factory) has many products including diammonium phosphate, granular/powdery monoammonium phosphate and industrial monoammonium phosphate and is the key producer of ammonium phosphate in China. Abundant phosphoserine resources exist where the Target Company is located, and it is close to coal producers, where it can integrate the nitrogen, phosphorus, and sulfur resources required for the production of ammonium phosphate that relies on its nonferrous metallurgy. The Target Company has formed a mature phosphorus ore - phosphate fertilizer - phosphogypsum - building materials cycle industry chain. This acquisition opens up the upstream industry chain and forms a multifaceted synergy with Stanley’s compound fertilizer business.
JunHe’s team conducted legal due diligence at the site of the Target Company, and fully demonstrated whether any relevant legal issues would constitute substantial obstacles and designed multi-level and multi-dimensional solutions and investment risk prevention clauses in the transaction documents, assisting Stanley to finally achieve its business needs and facilitate closing.
After closing, the synergy was obvious with both sides in the cooperation satisfied. Stanley recently increased the investment of RMB 640 million to construct a green high-efficient compound fertilizer project to be implemented by the Target Company with an annual production capacity of 1 million tons. JunHe provided meticulous, professional, efficient and experienced legal services during the acquisition, which was highly appreciated and recognized by the Target Company.
This Project was led by partner QU, Huiqing .