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Sinochem submits new offer for Nufarm

(China Daily/Agencies)
Updated: 2009-12-23 08:06

An employee handles Nufarm chemical products at a warehouse in Melbourne. Shares of Nufarm were traded below the revised offer in Sydney yesterday. [Agencies]

Sinochem Corp, China's largest chemical trader, lowered its offer by 7.7 percent to A$2.6 billion ($2.3 billion) for Nufarm Ltd, whose full-year profit declined to a five-year low.

The State-owned company proposes to pay A$12 a share for Australia's largest farm-chemical supplier, Melbourne-based Nufarm said yesterday. It's seeking more information on the new offer from Sinochem, which bid A$13 in September.

The proposal is China's second attempt in as many years to buy the Australian company for its global distribution network for pesticides and herbicides. Shares of Nufarm, which reported a 42 percent profit drop in September after cutting its forecast three times during the year, were traded below the revised offer, a signal that investors don't expect a rival bid.

"After three downgrades, Sinochem is in the driving seat in terms of pricing," said Hugh Dive, who helps manage about $3 billion at Investors Mutual Ltd. "If they walk away, Nufarm should trade down to A$9 as management credibility would be viewed by the investment community as severely stretched."

Nufarm shares closed yesterday at A$10.56. The stock, halted from trading in Sydney, is down 12 percent since the initial accord with Sinochem was announced on Sept 28.

"Sinochem has not yet clarified the terms and conditions that pertain to the revised price," Nufarm said in the statement.

"The Nufarm board will seek clarification from Sinochem in relation to conditions, which relate to the revised price before announcing whether it is prepared to recommend its support to Nufarm shareholders."

Sinochem spokesman Hu Hongjun didn't return a call to his Beijing office.

China National Chemical Corp, backed by buyout fund Blackstone Group LP, ended talks to buy Nufarm in December 2007 after a study of its accounts, without giving reasons.

The official period in which Sinochem could study its finances had ended, Nufarm said on Nov 19. The Australian company is a "complicated company operating in a challenging environment," Sinochem said on Dec 1 after Nufarm said they wouldn't meet their Dec 3 deadline to complete an initial deal.