Sinochem International (600500) and Yangnong Chemical (600486) separately announced they have reached agreement to cooperate, reports Shanghai Securities News, citing filings by the two companies.

Sinochem announced it is close to becoming the effective controller of Yangnong Chemical, while the latter said there will be no changes in the identity of its effective controller.

Yangnong Group is a producer of pesticides, organic chemicals, and inorganic chemicals. It recorded 2010 net profit of 355 million yuan, and 286 million yuan during the first nine months of 2011.

Yangnong Chemical said in a filing that controlling shareholder, Jiangsu Yangnong Chemical Group, will cooperate with Sinochem International and introduce the latter as a strategic investor.

Sinochem International currently holds a five percent stake in Yangnong Chemical.

Sinochem International said yesterday it plans to spend up to 1.634 billion yuan to acquire 61.66 million shares of Yangnong Chemical at not more than 26.5 yuan per share. 

It intends to buy 29.38 million shares at up to 26.5 yuan per share for 779 million yuan, and spend a maximum of 855 million yuan to acquire 32.28 million new shares to be issued by Yangnong Chemical. 

Should Sinochem International succeed in its bid, it will hold a 40.53 percent interest in Yangnong Chemical, and become the second-largest shareholder of Yangnong Chemical Group.