Halcyon Agri Corporation Limited and Sinochem International Corporation announced they have signed agreements to merge their natural rubber operations, creating the largest natural rubber company in the world with combined revenues in excess of $2.3 billion. Through the merger, the two companies will combine all assets to form the world’s most comprehensive natural supply chain with distribution network presence in key global markets including Asia, Europe and the U.S. with annual processing capacity of 1.5 million tons and annual natural rubber and latex sales exceeding 2 million tons.

In January Global AgInvesting reported on the possibility of the deal occurring, as part of China’s continued hunt for commodities acquisitions despite an economic slowdown.

Admittedly, China’s state-run oil companies have faced challenges with some recent acquisitions including cost over-runs and environmental setbacks. These events have cooled overseas purchases in the sector, but the vacuum has been filled by agricultural and chemical deals, according to Fidelity Investments.

Under the terms of the deal, state-owned Chinese oil and chemicals conglomerate Sinochem will acquire a 30.07% stake in Halcyon Agri for $0.75 cents per share, and will make a mandatory general offer (MGO) to all Halcyon shareholders at the same price. Following the MGO, Halcyon will make a voluntary general offer (VGO) for GMG Global Ltd. at an exchange ratio of 0.9333 Halcyon shares for each GMG share. Pursuant to this, Halcyon will also acquire Sinochem’s natural rubber processing asset in China and Malaysia and trading businesses for an exchange of 280 million Halcyon shares. The deal will also give Halcyon access to 153,000 hectares of land across Southeast Asia and Africa and 35 processing centers located in Indonesia, Thailand, China, Malaysia, and Africa.

After the completion of the deal, which is expected to be finalized by the end of the third quarter of this year, Halcyon Agri will continue to trade on the Singapore Exchange (SGX), however, Sinochem will be the majority shareholder in Halcyon Agri, which will be the holding company of the newly formed group.