Crop-chemicals company Nufarm has struck a $691 million deal to pick up a portfolio of products in Europe from Adama Agriculture Solutions and Syngenta Crop Protection.
Nufarm has been prowling for assets likely to be spun off amid a tide of multi-billion dollar deals in the global agriculture-chemicals industry. China National Chemical Corp. earlier this year secured European Union antitrust approval for its $US43 billion takeover of Swiss-based Syngenta on the condition it sell some of Syngenta and Adama’s assets.
Nufarm said it had agreed to buy a portfolio of established brands, with more than 50 crop-protection formulations and 260 registrations in European markets, from the companies for $US490 million, plus another $US50 million for inventory.
The deal will consolidate Nufarm’s position as a supplier in Europe and allow it to offer a broader suite of products in fungicides and insecticides, managing director and chief executive Greg Hunt said. The company currently generates its highest crop-protection margins in Europe, he said.
The company forecast the portfolio would contribute net sales of about $250 million and earnings before interest, tax, depreciation and amortisation of $95 million to $100 million in the 2019 financial year, improving overall margins and cash flow.
The deal will be funded via an underwritten $446 million share offer and $272 million from existing debt facilities, Nufarm said.
The portfolio being picked up by Nufarm includes herbicides, fungicides, insecticides, seed treatments and plant growth regulators that are sold in markets including Germany, Spain, France, Italy, Poland, Romania and Hungary. Completion of the deal remains subject to the European Commission’s approval of Nufarm as a “suitable purchaser,” as well as regulatory clearance by other European regulators.
At the same time, Nufarm said it had signed a long-term extension of a collaboration agreement with Sumitomo Chemical, which bought a stake in the Australian company in 2010 in a deal that saw the two companies agree to work together in areas including development, manufacturing and distribution.
By Robb M. Stewart
Source: Dow Jones Newswires via The Australian
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