Chinese Firm Buys Australian Rival

A CONSORTIUM led by state-owned China National Chemical (ChemChina) will acquire Australia's Nufarm in a friendly deal that values the generic agrochemical producer at $2.8 billion. The Chinese company made its offer with two private equity firms, Blackstone Group and Fox Paine Management.

The consortium has offered to buy the Australian firm's shares for 27% more than they were worth on Oct. 30, a few days before the deal was announced. Already approved by Nufarm's board, the deal will go through, the company says, as long as it does not receive a superior offer and an "independent expert" confirms that the deal is in the best interest of shareholders. After the sale, Nufarm will be combined with ChemChina's agrochemical business to create what the companies say will be the global leader in generic agrochemicals.

"This appears to be a strategic acquisition," says Susan Munro, a counsel in the Shanghai office of the international law firm O'Melveny & Myers. Munro, who specializes in mergers and acquisitions involving Chinese and foreign firms, adds that Chinese firms that acquire companies abroad usually don't replace local executives with their own management teams.

"ChemChina is possibly hoping to benefit in terms of technology and distribution channels from a company that operates internationally in a business that it is familiar with in China," she says.

The acquisition of Nufarm will deepen an existing relationship between ChemChina and Blackstone. In September, the private equity firm paid $600 million for a 20% stake in China National BlueStar, which was wholly owned by ChemChina (C&EN, Sept. 17, page 8).

Formed in 2004 through the merger of two chemical conglomerates, ChemChina is a diversified producer of chemicals that ranks as the country's largest maker of pesticides. ChemChina bought the Australian petrochemical producer Qenos in 2005 and Rhodia's silicones business in 2006.

Nufarm employs 2,600 people and is one of the world's 10 largest producers of crop protection products. Formed in the 1950s, it operates plants in 14 countries and claims to sell in 100.