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December 30, 2009

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Nufarm rejects Sinochem bid

SINOCHEM'S bid to buy a stake in farm chemicals maker Nufarm failed, as the Australian firm turned to Japan's Sumitomo Chemical's tender offer to buy a 20-percent holding after the Chinese company trimmed its offer price.

The move marked the second time a Chinese firm has failed to buy the Australian company to secure its global distribution network for pesticides and herbicides after China National Chemical Corp's failure to launch a A$3 billion (US$2.7 billion) bid in December 2007.

"We regret the Nufarm board has rejected the price as we regard the price reflects Nufarm's true value very well and took into full consideration shareholders' interest," Sinochem said on its Website. "Considering the difficulties and challenges ahead, the company firmly believes the offer price will benefit both parties."

Sinochem revised downward the value of Nufarm to A$12 a share from an initial offer price of A$13, thereby reducing the total investment by 7.7 percent to A$2.6 billion, citing concerns about Nufarm's profit outlook.

"Sinochem's revised proposal is less attractive than the position which was agreed between the parties in September," Kerry Hoggard, Nufarm's chairman, said yesterday.

Nufarm said it has signed a memorandum of understanding with the Japanese company to sell at least a 20-percent stake for A$14 per share, a near 33 percent premium from Nufarm's last traded price, and entered into an agreement to cooperate across a number of business areas.

Nufarm also said yesterday it would raise A$250 million to repay debt and pursue growth opportunities.

Nufarm has cut its earnings forecasts three times this year, reflecting a slump in the price of its key herbicide, glyphosate, in the United States market and weaker sales volumes than it had expected.

Nufarm is the biggest supplier of crop protection chemicals in Australia with about 45 percent of the market.


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