The ability to close big-ticket deals is obviously key, but knowing when to walk away from a deal is, according to Sinochem Group's legal manager, just as critical to successfully safeguarding large state-owned companies' overseas ventures and expansion.
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The ability to close big-ticket deals is obviously key, but knowing when to walk away from a deal is, according to Sinochem Group's legal manager, just as critical to successfully safeguarding large state-owned companies' overseas ventures and expansion.The general manager of Sinochem group's legal department, Yu Lemin, has been closely involved in a long list of the group's investment and acquisitions in and outside China. Recent deal highlights include: the US$3bn acquisition of Statoil Petr¢leo Brasil, the US$787m acquisition of UK-listed oil & gas explorer Emerald Energy, the US$465m acquisition of SOCO Yemen, and the US$2.8bn takeover bid for Australian-based Nufarm.
The bid for Nufarm, although was rejected by the target company at the end of 2009, is so far the most valuable experience to Yu Lemin and his department. Sinochem tried to acquire 100% of Nufarm by way of scheme of arrangement at A$13/share, and then after due diligence A$12/share, which was not enough for the Nufarm board. The target company then turned immediately to Sumitomo, which eventually took a 20% stake in Nufarm for A$14/share. Yu recalled that when the Sumitomo-Nufarm deal was first announced, Sinochem's deal team was criticised by the media, but, after a fifth earnings down-grade and a nose-dive in the share price of Nufarm to less than A$4, lauded the team as "heroes".
"I'm not sure whether we are heroes or not. But one thing is certain - we were doing a right thing by not pursuing the deal. The most important thing is not whether the transaction goes ahead, but rather ensuring the outcome is in the best business and strategic interests of the client," he said.
Australian firms Blake Dawson and Arnold Bloch Leibler were involved in this US$2.4bn proposed takeover, representing Sinochem and Nufarm respectively. ALB
Yu Lemin and his 10-member in-house legal team at the headquarters of Sinochem Group has been featured as one of China's top 10 in-house legal departments in the cover story - 2010 ALB China In-house 10, which will be published in ALB China magazine Issue#7.10.