Sinochem’s bid for Nufarm still unclear

Date:12-23-2009

Talks between Chinese state-backed chemicals trading business, Sinochem and Australia’s largest agricultural chemical manufacturer, Nufarm Ltd. seem to have reached a stalemate. The Chinese company was looking towards Nufarm to become a global company in the crop protection industry. The initial offer by Sinochem was subsequently cut down by nearly 8 percent and now stands at A$2.6bn (US$2.3bn).

The shares, which were earlier valued at A$13, have been devalued to A$12. Nufarm Ltd. understandably is miffed with this development. Moreover, the Chinese company has failed to sign on a binding agreement on time.

Nufarm Ltd.’s Chairman, Kerry Hoggard stated that his company was disappointed with Sinochem’s inability to proceed as mutually decided. Sinochem, on the other hand, is quoting the lengthy due diligence process into the finances of the Australian company as a reason for the delays. According to Government’s rules, any takeover has to be Okayed by the Foreign Investment Review Board of Australia.

Nufarm have yet to make a statement on the revised offer. Their shareholders do not seem very keen about selling to Sinochem. "We are disappointed they have reduced the offer, but we will wait and see what the company recommends", said Ross Barker, Managing Director of Nufarm shareholder Australian Foundation Investment Co.