Farm chemicals supplier Nufarm has ended market speculation and announced that Chinese chemical trader Sinochem Corp has approached the company about acquiring the business. Nufarm also warned its profit may miss targets.
Its shares finished the day up 13 per cent, or $1.28, at $11.12.
Nufarm said in a statement on Friday that Sinochem had approached the company ''on a confidential, preliminary and incomplete basis''.
''There is no certainty that any agreement will be reached or that an offer or proposal will be put to Nufarm shareholders,'' the company said in a statement.
''The Nufarm Board will consider any offer or proposal it receives having regard to all the alternatives available to the company.''
It's the second time Nufarm has been approached by a Chinese company. In 2007, China National Chemical Corp (ChemChina), China's leading chemical producer, led a $3 billion approach with US private equity firms Blackstone Group and Fox Paine Management but they failed to come up with a formal offer.
Nufarm says it will keep its shareholders fully informed and a further announcement will be made in the event of any material developments.
Nufarm said there was a risk that its year end net operating profit may be below the revised guidance issued on June 16, 2009.
''It is possible that Nufarm's net operating profit may be more than 10 per cent to 15 per cent below the previous guidance, but we are not yet in a position to determine whether this will be the case,'' it said.
Growers in the US planted crops very late in the season and this has resulted in later than normal buying decisions.
''As a result, Nufarm now expects that at the end of the company's financial year (July 31) it will have a higher accounts receivable balance and a higher net debt balance than indicated in May 2009, both of which it expects to revert to a more normal level in the near term.''
The company said it was not in a position to determine whether it would record any material abnormal or extraordinary items for the financial year ending July 31.
Nufarm's results annual results are due to be announced on September 28.
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