Sinochem Bids For Nufarm

State-owned Chinese agrochemicals maker Sinochem has made a $2.5 billion bid for Nufarm, an Australia-based maker and distributor of generic crop protection chemicals.

A number of conditions must be met before a final deal can be put into place. Sinochem notes that its offer is nonbinding and depends on a review of Nufarm’s books. In addition, Nufarm says independent experts will have to agree that the deal is a good one for its current investors. And then both firms must obtain government approvals before any transaction can take place.

If the bid is successful, it will combine Sinochem, with about $90 million in crop protection chemical sales, with Nufarm, which has $2.4 billion in worldwide crop protection sales. Sinochem has $45 billion in chemical and petroleum sales. According to consultant Gautam Sirur of U.K.-based Cropnosis, the deal would make Sinochem the world’s seventh-largest crop protection firm, inching it ahead of Israel’s Makhteshim Agan.

Sinochem says Nufarm will help it “become a leading global company in the total crop protection value chain, including R&D, production, distribution, and services.” That ambition would also set Sinochem up in competition with firms such as DuPont, Dow Chemical, Bayer, and Syngenta.

Sirur notes that Nufarm would give Sinochem the ability to globalize its sales of glyphosate, the active ingredient in herbicides such as Monsanto’s Roundup. In fact, Sinochem has the license from Monsanto to use the Roundup brand name in China, and Nufarm has the license in Australia and New Zealand. Nufarm would also give Sinochem crop protection manufacturing assets in the U.K., France, Australia, Brazil, and the U.S., Sirur says.

Observers wonder if Australia’s Foreign Investment Review Board will nix the deal because it blocked several Chinese state-owned firms from buying Australian mining operations. However, Sirur says the government is likely to approve this acquisition because Nufarm is not a strategic asset.

This is not the first time Nufarm has been approached by a Chinese buyer. In November 2007, China National Chemical made a deal along with private equity firms Blackstone Group and Fox Paine to buy Nufarm for $2.8 billion (C&EN, Nov. 12, 2007, page 12). The deal died a month later without explanation.

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