Nufarm sells off South American business

Nufarm sells off South American business to Sumitomo

Cropping News
Investors reacted favourably to the news Nufarm is selling its South American crop protection business.

Investors reacted favourably to the news Nufarm is selling its South American crop protection business.

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Nufarm has sold off its South American crop protection business to Sumitomo, in a move which has pleased the stock market.

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INVESTORS have reacted favourably to the news Nufarm will sell off its South American crop protection business, with shares rallying as much as 48pc this week before cooling off slightly.

Nufarm shares jumped from $4.46 on Friday to as much as $6.60 on Monday after news of the sale before dropping slightly, but holding onto the vast majority of the gains at $6.37 on Thursday afternoon.

The chemical giant will sell its crop protection and seed treatment business in South America, which operates across the continent's major agricultural nations in Brazil, Argentina, Colombia and Chile.

The sale, to Japanese chemical company Sumitomo, which also owns a share of Nufarm, will be worth $1.18 billion.

As part of the deal Nufarm was confirmed as the preferred commercialisation partner for Sumitomo's proprietary fungicides Pavecto and Indiflin in Europe while Nufarm and Sumitomo will enter into a two year supply agreement and transitional services agreement under which Nufarm will provide procurement services and continued supply of certain products to the South American businesses.

Nufarm has faced a tough year financially on the back of the Aussie drought and has long been rumoured to be looking to sell some of its assets to shore up its balance sheet.

Nufarm had faced mounting financial pressures in the wake of drought and supply chain issues out of China after spending big on European farm chemical portfolios that have been slow to deliver promised returns.

Nufarm chief executive Greg Hunt said the sale was good news for company shareholders.

"This transaction represents compelling value for Nufarm shareholders and will provide an opportunity to refocus on other parts of the business where we can generate higher margins and stronger cash flow," he said.

"The significant reinvestment we have made in our European, Nuseed and North American businesses in recent years, along with the next phase of transformation in our Australian business, is

expected to deliver earnings growth and improved returns for shareholders in the coming years".

The story Nufarm sells off South American business first appeared on Farm Online.

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