29th September 2004
|
ASX Announcement
|
Nufarm to invest in leading
Brazilian crop protection company
|
Nufarm Limited announced today that it has signed a Memorandum of Understanding to acquire 49.9% of Agripec Química e Farmacêutica S.A (Agripec), Brazil’s largest locally owned crop protection company.
The acquisition will see Nufarm secure a strong position in one of the world’s largest and fastest growing markets for crop protection products.
The proposed acquisition is subject to final due diligence and approval of the Nufarm Board, and is expected to be completed by the end of November.
Under the terms of the M.O.U., Nufarm will acquire 49.9% of Agripec, which is privately owned, in a transaction with a total consideration value of US$120 million.
The acquisition – to be debt funded - is forecast to contribute approximately $12 million in net profit in Nufarm’s 2005 financial year; is earnings per share positive, and exceeds the company’s EVA return target of 15.5% in year one.
Agripec was established in 1961 and employs 365 people. The company operates a major production facility in Fortaleza and has an extensive sales network which services all major farming regions in Brazil.
Agripec’s 2004 calendar year sales are forecast to be approximately USD200 million. The company has experienced strong sales growth in recent years, reflecting the substantial growth in agricultural production in Brazil and the subsequent increase in crop protection sales.
With total Brazilian crop protection sales of USD3.1 billion in 2003, Brazil now ranks behind the United States and Japan as the third largest country market in the world. It is also one of very few markets in which crop area is expected to increase over the next 10 years.
Nufarm’s Managing Director, Doug Rathbone, said the equity interest in Agripec will be a key element of Nufarm’s expansion into South America.
“Agripec has a strong and growing position in Brazil and is a well managed, profit driven company with an expanding product range ideally suited to local crop protection needs.
“This transaction gives Nufarm the opportunity to substantially increase our presence in what is a key global market, while at the same time taking advantage of the experience, local knowledge and existing market access associated with Agripec’s incumbent position.”
Mr Rathbone said future earnings from Agripec will be equity accounted and will contribute to a stronger first half performance from Nufarm, given the major selling period in Brazil falls within July to December.
Nufarm will complete the final stage of its acquisition of phenoxy herbicide brands from BASF (announced in January) when it assumes control of the ‘U46’ 2,4-D brand in Brazil in November. The brand will be utilised in Agripec's business, which has the resources to support the product and maximise sales.
Mr Rathbone said Nufarm and Agripec will, in due course, explore options for further cooperation and possible synergies relating to Nufarm's business in other South American markets.
|
-- end --
Further information:
Robert Reis
Corporate Affairs
Phone (61 3) 9282 1177
|
Home
News & Press Releases
