Sinochem Corp, the country's leading chemicals trader, was in preliminary talks with Nufarm for a possible takeover, marking the second attempt by a Chinese company to buy Australia's biggest farm chemicals supplier in two years.
"Sinochem and Nufarm are in early stage discussions regarding a potential acquisition of Nufarm. These discussions are incomplete and there is absolutely no certainty that matters will progress," the Beijing-based Sinochem said in a statement on Sunday.
"This is one of a range of potential growth opportunities that Sinochem is currently exploring," the company stated.
Nufarm also said earlier that Sinochem had approached it in relation to the potential acquisition.
Analysts said the deal would expand the Chinese company's manufacturing facilities of pesticides and herbicides, as well as extend its overseas network.
"It would enable Sinochem to have a foothold in Australia and the Americas. It is in line with the company's overseas strategy," said Chen Lei of China Galaxy Securities.
Nufarm now has manufacturing facilities in 14 countries, marketing operations in 20 countries and product sales in over 100 countries. The company's market value was around $2 billion.
Nearly 28 percent of Nufarm's revenues were generated in Australasia, 29 percent in North America, and 23 percent in South America in the six months ending in January this year.
This is the second time that a Chinese company has shown interest in Nufarm. In 2007, China National Chemical Corp (ChemChina) and two US private equity firms agreed to pay A$3 billion in cash for the company.
ChemChina has adhered to the strategy of internationalization and successfully acquired four overseas businesses, including Adisseo in France, Qenos in Australia and the organic silicone business of Rhodia in France.
Chinese companies have had a mixed track record in acquiring Australian assets. State-owned Aluminum Corp of China's $19.5-billion investment in Rio Tinto Group was rejected last month after Rio decided to seek a share sale and a joint venture with BHP Billiton Ltd.
China Minmetals Group had to revise a bid for assets of OZ Minerals Ltd after the Australian government ruled a mine is close to a weapons-testing range.
(China Daily July 28, 2009)
