Re: Update on Status of Negotiations With ChemChina

Dec 28, 2010, 03:40 ET from Makhteshim Agan Industries Ltd

TEL AVIV, Israel, December 28, 2010 /PRNewswire-FirstCall/ -- The Makhteshim Agan Group (TASE: MAIN), the world leader in branded off-patent crop protection solutions, today updates regarding the status of negotiations with ChemChina.

Pursuant to the Immediate Reports dated October 11, 2010 and November 21, 2010 (Ref. Nos. 642195-01-2010 and 686415-01-2020) the Company hereby updates as follows:

Koor Industries Ltd has reached agreements concerning strategic cooperation with ChemChina (hereinafter "ChemChina"), a large Chinese company controlled by the Chinese Government active in the areas of chemicals and agrochemicals. According to the agreements, the Company together with Koor and the China National Agrochemical Corporation, part of the ChemChina Group, subject to approval by their Boards of Directors and by the Company's Audit Committee, are expected to sign within about two weeks on the agreement by which a merger will take place, whereby the public holdings in the Company will be purchased and the Company will become a privately held company (hereinafter "the Transaction").

The main points of the agreements reached are as follows:

Following the completion of the Transaction ChemChina shall hold all of the shares held by the public shareholders of the Company and an additional 7% of the Company's shares that shall be purchased from Koor (hereinafter "the Acquired Shares"). The Acquired Shares shall be purchased at a price that shall reflect a valuation of the Company of USD 2.4 billion (calculated according to effective holdings that do not include treasury shares held by the Company or its subsidiary. Such valuation reflects, at the date of this report, a price per share of approximately NIS 19.98, considering the current dollar exchange rate and before dilution in a marginal amount likely to be caused by the exercise of employees' options).

It is anticipated that following the completion of the merger, the Company will be held 60% by ChemChina and 40% by Koor.

As part of the agreement, the public shareholders of the Company will receive aggregate consideration of approximately USD 1.272 million for the sale of approximately 53% of the Company's shares, and Koor will receive consideration of approximately USD 168 million for the sale of approximately 7% of the Company's shares. In addition, as part of the Transaction, ChemChina is anticipated to arrange for a non-recourse loan to Koor in the amount of USD 960 million, which shall be secured only by the Company's shares held by Koor. (For additional information concerning the loan to Koor, see Koor's Immediate Report of today's date).

In addition, to the best of the Company's knowledge, as part of the Transaction ChemChina shall sign with Koor a Shareholders' Agreement that will organize their rights in the Company, including nomination of directors on a proportional basis and certain limitations on the sale of shares. Inter alia, ChemChina will be obligated to remain the largest shareholder in the Company for a number of years, and Discount Investment Corporation Ltd. the controlling shareholder in Koor, shall commit not to sell control in Koor for a period of at least three years.

The execution of the Transaction is subject, inter alia, to the signing of definitive agreements between the parties and to approvals required under applicable law, including approval for the merger by the general meeting of the Company's shareholders and the approvals of Chinese governmental authorities. The closing of the transaction is anticipated to occur during the second or third quarter of 2011.

    There is no assurance that the Transaction will be completed.

    Rony Patishi-Chillim
    Head of Global Corporate Communications

SOURCE Makhteshim Agan Industries Ltd