China National Chemical Corp (ChemChina) and two US private equity firms agreed to pay A$3 billion ($2.75 billion) in cash for Australia's Nufarm Ltd, a deal that would form the world's largest supplier of generic farm chemicals.

 

The offer, by ChemChina, Blackstone Group and Fox Paine Management, values the Melbourne-based company at A$17.55 a share, 27 percent higher than its closing price on October 30, Nufarm said yesterday in a statement. The price includes the payment of a 30 cent a share dividend by Nufarm, it said.

 

ChemChina is the first State-owned Chinese company to team up with buyout firms for an overseas acquisition. Buying Nufarm gives ChemChina entry to the $36 billion global market for herbicides and pesticides as a worldwide agricultural boom spurs acquisitions.

 

Under the offer, Nufarm's management team would continue to manage the combined operations of Nufarm and ChemChina.

 

Nufarm said it would recommend shareholders vote for the offer, subject to there being no better offer and to an independent expert's report, but added that it was subject to a number of conditions and there was no certainty it would result in a formal bid.

 

Any takeover would need the support of Nufarm CEO Doug Rathbone, who owns 17 percent of the company, and the Goodfellow family in New Zealand, whose affiliates together own about 10 percent.

 

Analysts said Nufarm has been seen as ripe for a takeover as chemical companies and private equity investors look to tap into booming demand from producers of soft commodities such as sugar. They said there could be other offers.

 

ChemChina's plan marks its latest push offshore, which began in 2005, when it bought a European silicone business from French firm Rhodia. The company was created in 2004 by putting together several chemical firms spun off from the former Ministry of Chemical Industry.

 

Earlier in September Blackstone said it would spend $600 million on a 20 percent stake in China National BlueStar (Group) Corp, a subsidiary of ChemChina.

 

Blackstone will buy the stake from ChemChina, which will hold the other 80 percent of BlueStar after the deal.

 

(China Daily-Agencies November 6, 2007)