Drop in share value puts Nufarm takeover on the table
Could an all-of-company takeover of Nufarm be on the cards?
As of Friday, Nufarm’s share price was down about 38 per cent over five days with its market value at $1bn, close to the price at which the company’s Seed Technologies unit is valued.
The Seed Technologies unit is now subject to a UBS-run strategic review, which could lead to a sale, after groups such as BP and the KKR-backed Advanta expressed interest.
A suitor may determine it is better to buy the entire company that was worth double what it is currently trading at a year ago, potentially attracting private equity suitors.
However, one deterrent could be its debt pile, with net debt at $1.36bn.If a buyer for its $900m Seed Technologies business cannot be sought, analysts are not ruling out an equity raising.
“Trying to sell this business when earnings are so depressed may result in a disappointing outcome,” Morgans said in a research note, citing $27.7m of annual earnings before interest, tax, depreciation and amortisation for the 2025 financial year compared with the previous corresponding period of $83m.
This was despite its $895m book value and other recent seed transactions being done on large multiples equating to more than 20 times EBITDA. Proceeds would likely be required to restore Nufarm’s balance sheet.Morgans said in recent years, investors had been excited by the growth profile and margins of the Seed Technologies business, but Nufarm had shown that the business could be severely impacted by unfavourable seasonal conditions and volatile pricing and it was highly capital-intensive.For the half year, the unit’s EBITDA fell 46 per cent to $40.7m.
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