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September 29, 2009

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Sinochem in bid for Australia's Nufarm

SINOCHEM Corp, China's biggest chemicals trader, has made a A$2.8-billion (US$2.4 billion) offer to buy Australian farm chemicals maker Nufarm Ltd.

This marks China's second attempt to buy Nufarm in as many years, after China National Chemical Corp, or ChemChina, failed to launch a A$3 billion bid in December 2007.

Nufarm supplies pesticides and herbicides to farmers to protect crops and operates from Australia to Europe and the Americas.

Sinochem signed an initial accord to pay A$13 a share, Nufarm said yesterday. That's a 17-percent premium to its last traded price before the announcement. The news sent Nufarm shares up 7.36 percent at A$11.96 by yesterday's close, though the company said there was no certainty the agreement will be executed.

Unlike some other acquisition targets sought by China in Australia's resources sector, the Nufarm takeover is mainly aimed at boosting Sinochem's global presence, as China is not short of such products, Beijing Orient Agribusiness Consultant Ltd analyst Xu Hongzhi said.

The purchase will accelerate Sinochem's strategy to become a leading global player along the complete crop protection value chain, Sinochem said in a statement.

The deal needs the approval of regulators in China and Australia.

Sinochem is being advised by Royal Bank of Scotland, while UBS is advising Nufarm.

Nufarm reported a 2.6-percent drop in net profit, excluding one-time items, for the year ending July 31, but said earnings will improve in the current fiscal year.


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