NufarmFertiliser maker Nufarm Ltd says China's Sinochem has made...

Nufarm


Fertiliser maker Nufarm Ltd says China's Sinochem has made a takeover approach for the company, though the discussions are preliminary and incomplete, and has warned its profit may be more than 15 per cent lower than previously forecast.

"Nufarm has been approached by Sinochem (on a confidential, preliminary and incomplete basis) in relation to the potential acquisition of Nufarm," the fertiliser maker said in a statement to the Australian Securities Exchange (ASX).

"There is no certainty that any agreement will be reached or that an offer or proposal will be put to Nufarm shareholders."

At 1205 AEST, Nufarm shares were 9.85 per cent stronger at $10.81, following a 10.3 per cent share price surge the previous day on speculation Sinchem had made an approach.

The company said its board would consider the offer and keep shareholders informed, with a further announcement to be made in the event of any material developments.

Nufarm said it was not yet able to determine whether a decline in demand for glyphosate and increased price competition would affect its full year earnings.

"There is a risk that Nufarm's year end net operating profit may be below the revised guidance issued on 16 June 2009," the company said.

"It is possible that Nufarm's net operating profit may be more than 10-15% below the previous guidance, but we are not yet in a position to determine whether this will be the case."

Nufarm said late planting in the United States had led to later than normal buying decisions by growers, which in turn would cause the company's accounts receivable balance and net debt balance to rise higher than expected.

Nufarm is due to report its results for fiscal 2009 on September 28.

"The company is not in a position to determine whether it will record any material abnormal or extraordinary items for the financial year ending 31 July 2009. When preparing its year end accounts the company will consider items that are proposed to be treated on a non-operating or abnormal basis,'' Nufarm said.

"These items may include costs and benefits associated with manufacturing restructuring in Europe; costs relating to the regulatory inquiries associated with the AH Marks acquisition; and the possibility of a revaluation of glyphosate inventories."

China's number one chemical producer, China National Chemical Corp (ChemChina), led a $3 billion approach with US private equity firms Blackstone Group and Fox Paine Management in 2007, although did not present a formal offer.