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China’s Sinochem in Talks With Commodity Giant Noble Group for Equity Stake: Report

By | Feb 14, 2017 10:45 AM EST
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China’s Sinochem in talks to buy equity in Noble Group.

Noble confirmed the equity sale in its latest stock exchange filing as it mentioned that it was in "discussions regarding a possible strategic investment." (Photo : Getty Images. )

China's state-owned Sinochem is in preliminary talks to pick up a substantial equity stake in the commodity giant Noble Group, according to inside sources. There is no information, however, on how much stake Sinochem is looking to buy in the commodity firm.

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Noble confirmed the equity sale in its latest stock exchange filing as it mentioned that it was in "discussions regarding a possible strategic investment." However, it did not name the concerned party and also cautioned that there was "no certainty as to whether the transaction may be concluded."          

Analysts say that Sinochem, which is China's largest fertilizer trader, expects to become a globally recognized energy trader by picking up a stake in the Noble Group. As for what the equity sale will mean for Noble, it will help to rejig its embattled business that has been badly hit due to drop in commodity prices.       

Rising debt and investor pressure have been weighing heavily on the Hong Kong-based commodity firm, with the company's shares falling to their lowest level in 13 years in August last year. Besides, the company's fortunes have also been severely affected by repeated allegations that it is fudging its accounts and results. 

Meanwhile, sources claim that the management team of Sinochem and Noble have held talks several times in recent months. They claim that both held a meeting recently at Noble's U.S. regional hub in Stamford, Connecticut.

Sinochem is reportedly carrying out the due diligence of the Hong Kong-based firm, and this process can easily take anywhere between six months to a year.

Sinochem and Noble Group have declined to comment on the report of equity sale.

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