Interesting article in The Australian that @Suvs was referring to.

Not hard to see a material debt reduction by selling part (or all) of the Seeds business, and I think a rough sum of the parts of Nufarm would speak for a considerably higher valuation than current SP.

If market cap remains where it is I think we'll see a major take it out, or barbarians will take it private and unlock the unrecognised value from a breakup play.

Personally I think some of the short-term challenges & underperformance in some of their key markets was already suspected or known by some sophisticated/insto investors before the latest disappointing results, and the latest market reaction looks a bit overdone. Probably a combination of current risk-off sentiment dropping any disappointment like a hot potato, plus aggressive discounting due to fear of a cap raising to reduce leverage (I really don't see them going this way).

Either way when the dust settles from this chapter - I think we may see some changes in the top brass, has been a pretty underwhelming couple of years "performance" by the company. Too many disappointments. Perhaps we are simply in an age of turbo-charged globalisation where only the biggest companies thrive .... so perhaps it's time for Nufarm to consider a suitable betrothal or other play to unlock value for shareholders.

********************************************************************************************************************************************************

Nufarm fields interest from KKR-backed Advanta and BP for seeds business | The Australian

Nufarm fields interest from Advanta and BP for its $900m seeds business

Nufarm’s Seed Technologies business sells seeds to farmers for crops such as canola but its omega-3 seeds business that can be used for bio-fuels or for dietary purposes is considered its growth platform. Picture: iStock

14 hours ago

Nufarm has fielded approaches from the Kohlberg Kravis Roberts-backed Advanta and BP for its $900m seeds business, sources say.

The $1.5bn Australian-listed agricultural chemical company announced that the unit was subject to a UBS-advised strategic review on Wednesday when it reported a 39.5 per cent fall in net profit after material items to $29.75m for the six months to March 31.

Shares fell 30 per cent on the lower-than-expected earnings driven by weakness in omega-3 oils, higher overhead costs and its lower revised full-year guidance.

DataRoom understands that Advanta Enterprises, of which KKR owns 13.3 per cent as part of its Global Impact strategy, has shown interest in buying the division as a whole.

BP has been keen to buy a major stake, as part of its strategy to position itself towards biofuels, but does not want exposure to the remaining crop protection division, so it may make sense to spin it out.

The British oil giant already has a research and development agreement with Nufarm, as does Unilever, for the development of Biomass Oil used in bioenergy and fast moving consumer goods.

However, the company has not determined whether to sell or split the operation, and sources have suggested that some directors are opposed to it.

Advanta counts India’s UPL as its major owner, and DataRoom understands that Nufarm was keen to buy the business in the past when it was owned by Paine Schwartz but was beaten by UPL.

Big global players have mandates around energy transition and are interested in investing in platforms.

Nufarm’s Seed Technologies business sells seeds to farmers for crops such as canola but its omega-3 seeds business that can be used for bio-fuels or for dietary purposes is considered its growth platform.

It consists of a highly profitable hybrid seeds platform, two global, large-scale “ready now“ technologies in commercial ramp-up and a pipeline of emerging technologies, the company said.

A move to spin out the seeds unit has been up for discussion for years, and one argument for doing so is that Nufarm may lack the capital needed for the scale of investment, but on the flipside it is the company’s growth engine.

Its activist investors such as John Wylie’s Tanarra Capital, L1 Capital and Allan Gray have been keen to see Nufarm’s crop protection operations split from Seed Technologies.

Nufarm’s Seed Technologies unit reported $249m of interim revenue and underlying earnings before interest and tax of $15.9m, a 71 per cent decline on the previous corresponding period on the back of lower licensing revenues, lower margins in omega-3 and lower canola revenues in Australia.

There was solid performances from canola, sorghum and sunflower seeds, but drier conditions in Australia negatively impacted sales of canola, the company said.

Sorghum and sunflower were broadly in line with the prior year.

A significant fall in fish oil prices negatively impacted margins for omega-3.

Following the approval of Aquaterra products for use in Norway, Nufarm said it continued to move forward with broad industry support and commercial negotiations for entry into that market.

Biomass oil, one of Nufarm’s areas of development, is a new technology developed by Australia’s CSIRO which aims to increase the oil content of plants. Its initial research and development focus is on the use of that technology in sorghum and sugar cane.

Bridget CarterDataRoom Editor