Tue, Sep 29, 2009 - Page 11 News List

Sinochem offers to buy Nufarm


Sinochem Corp (中國中化) has offered to buy Australia’s Nufarm in China’s second attempt to takeover the farm chemicals producer.

The proposed A$2.8 billion (US$2.4 billion) deal will be the latest to draw the scrutiny of Australian foreign investment regulators as Chinese state-owned firms seek to expand their investments in foreign companies. Of several such plans in Australia, some have run into trouble.

Nufarm, which manufactures herbicides, fungicides and other chemicals used in farming, said yesterday it had entered into a nonbinding proposal for Sinochem to buy all of Nufarm’s shares for A$13 each, valuing the company at about A$2.8 billion.

Nufarm’s share price jumped more than 6 percent to A$11.87 after a trading halt was lifted. Also yesterday, Nufarm said its net profit for the year to July 31 had fallen 42 percent to A$79.9 million.

The company said in July that Sinochem had approached it about a potential takeover, but did not release details.

It was the second time China had approached Nufarm about a buyout. In 2007, a consortium led by China National Chemical Corp (中國化工), or ChemChina, launched a bid calculated at the time to be worth about A$3 billion, but the plan fell apart before it could be completed.

The latest deal requires approval from Australia’s foreign investment review board and the government. Treasurer Wayne Swan has said he will only sign off on large foreign investment deals if they are in the national interest.

Australia’s Defense Department cited security grounds last week when it vetoed Chinese investment in the proposed Hawks Nest Magnetite mine, which lies within in a military range in South Australia.

China Minmetals Nonferrous Metals Co (中國五礦) in March had to rejig its bid for Oz Minerals Ltd as one of its mines was also within the military area. The amended deal, worth A$1.7 billion, was approved by shareholders in June.

Rio Tinto in June dropped a US$19.5 billion bid from China’s Chinalco (中國鋁業) to increase its stake to 18 percent.

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