Nufarm, pursued by Sinochem, finds cornerstone investor in Sumitomo Chemical

Tuesday 29th December 2009

Nufarm Ltd, the Australasian farm chemical company being pursued by China’s Sinochem Corp., said Japan’s Sumitomo Chemical Co. has agreed to buy a 20% stake in the company at a superior price.

Sumitomo plans to acquire a fifth of Nufarm via a tender offer to shareholders at A$14 a share. The offer eclipses Sinochem’s proposal, which was trimmed back to A$12 apiece from A$13 last week.

“Sumitomo’s proposal places an appropriate value on the company and provides all Nufarm shareholders with the opportunity to realize a fair price for some of their shares,” Nufarm chairman Kerry Hoggard said in a statement. The two companies will also cooperate on some business lines in a strategic relationship that are expected to “deliver meaningful benefits” to Nufarm.

Sumitomo’s crop protection business, which has annual sales of about US$1.3 billion, is complementary to Nufarm’s, with more than 40% derived from insecticides.

Shares of Nufarm climbed 3.7% to A$10.95 on the ASX today, giving the company a market value of A$2.3 billion. They have gained 12% in the past 12 months.

On completion of the tender offer, Nufarm plans to raise A$250 million via a renounceable entitlement offer to shareholders. The offer will be fully underwritten by UBS AG.

“Our balance sheet is expected to be in a strong position at year end, allowing us to pursue growth opportunities and to continue to support the ongoing needs of the business,” managing director Doug Rathbone said.

Businesswire.co.nz

Comments from our readers

No comments yet