Interpac Business and Migration Solutions Melbourne Australia

December, 29, 2009

NUFARM rejected today a revised $2.62 billion takeover offer from China's Sinochem and instead agreed for Japan's Sumitomo Chemical to buy a 20 per cent stake through a tender offer to existing shareholders.

Nufarm also unveiled plans for a fully underwritten entitlement offer to raise $250 million.

The Melbourne-based global crop chemical company said it has terminated talks with China's Sinochem after deciding its $12 a share offer undervalued the group and wasn't in the best interests of shareholders.

"Sinochem's revised proposal is less attractive than the position which was agreed between the parties in September and doesn't provide certainty for Nufarm shareholders," Nufarm chairman Kerry Hoggard said.

Nufarm said it has executed an agreement with Sumitomo Chemical that will see the Japanese group take a 20 per cent stake in the Australian company at $14 a share via a tender offer, which is subject to shareholder approval.

Sumitomo will offer to acquire at least 20 per cent of the shares of all Nufarm holders, with those who wish to sell more having the opportunity to do so on a pro-rata basis.

Nufarm and Sumitomo also plan to co-operate across a number of business areas and Sumitomo will nominate one director to the Nufarm board.

Mr Hoggard said: "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.”

After completion of the tender offer, Nufarm plans to carry out a $250m renounceable entitlement offer to all shareholders, including Sumitomo.

Mr Hoggard said the offer, to be fully underwritten by UBS, would be carried out at "an attractive price" and would strengthen the group's balance sheet and allow it to pursue growth opportunities.

Sinochem last week reduced its offer for Nufarm to $12 a share from $13, but many analysts had still been expecting Nufarm's board would recommend the lower offer due to perceived lack of potential rival bidders.

IG Markets said the Sumitomo tender offer was a great result for Nufarm shareholders, who had been facing the prospect of either accepting a lower Sinochem offer or seeing their shares fall if the board rejected the revised bid.

"Sumitomo turned out to be the white knight waiting in the wings, happy to give shareholders the opportunity to sell out part of their stake at $14 per share, while retaining a decent percentage to benefit from a turnaround in performance," IG Markets analyst Cameron Peacock said.

By late morning, Nufarm was trading up 2.8 per cent at $10.86, outpacing the gains in the broader market. The benchmark S&P/ASX 200 index was 1.1 per cent higher.

A spokesman for Sinochem said the group would be making a statement shortly.

Nufarm also announced today that it has made progress on refinancing of its debt, completing all the $1bn worth of renewals due by the end of calendar 2009.

(Source from TheAustralia.com.au)