Ann: Sale of Nufarm South America to Sumitomo for $1,188 million, page-5

Hmmm...

So, before this transaction, NUF was trading at at an EV/EBITDA multiple of around 7x
(EV of $2.95bn, comprising $1.69bn in Equity Value and $1.25bn in Net Debt, on EBITDA of $420m)

Now they've sold $97m in EBITDA (almost a quarter of total group EBITDA of $420m) for a multiple in excess of 12x.

Which means the remaining NUF business will, assuming the transaction concludes, be valued at EV/EBITDA of just 5.4x.

Not just that, but the financial risk we be all but gone, given that pro forma Net Debt-to-EBITDA will be around 0.7x, compared to 2.9x currently (Net Debt expected to be around $200m). And that balance sheet position includes some remaining working capital bloat due to the drought conditions being experienced in some of NUF's markets, which means that NUF is likely to be debt-free sometime over the next 12 months (assuming they don't do anything cute on the acquisition front, which I don't think will happen given the board will, I expect, still be feeling duly chastised for getting the balance sheet into the sub-optimal state in which it currently is).

So, assuming that the company still maintains its 7.0x EV/EBITDA multiple, that would result in it trading at a share price of $5.50/shareto $6.00/share.

And if there is a degree of re-rating to reflect the fact that the balance sheet is now debt-free (which I think should be the case), to a multiple of, say, 8x EV/EBITDA - which, I argue, would not be overly aggressive especially given that NUF is not trading anywhere near to the top of its earnings cycle - then that would correspond to a share price closer to $6.50.

..