Sumitomo to lift Nufarm stake to 23%

Sumitomo said on Tuesday that it had increased its stake in Nufarm to 21.7 per cent and intended to acquire another 1.3 per cent, which would take its shareholding in Nufarm to 23 per cent.

The purchase of 4.5 million Nufarm shares from Mr Rathbone was agreed after the market had closed on Monday, at $5.28 per share.

 "Sumitomo plans to purchase additional shares from the market within the next six months so that Sumitomo's shareholding in Nufarm will reach approximately 23 per cent," Sumitomo said in a statement.

"The decision to increase Sumitomo's ownership stake in Nufarm is a clear indication of Sumitomo's confidence in Nufarm's business and the strong growth prospects that exist for both Nufarm and Sumitomo."

Sumitomo said that since making its strategic investment in Nufarm in April 2010, its collaboration with Nufarm in distribution, development, product formulation and logistics had started to generate benefits.

Increasing the stake in Nufarm would strengthen the relationship with Nufarm and expedite collaboration in more areas.

Mr Rathbone said he had decided to sell the 4.5 million shares after Sumitomo had indicated it intended to lift its stake in Nufarm from 20 per cent to 23 per cent by taking advantage of the "creep" provisions in the Corporations Act.

"The opportunity to sell this parcel of shares to Sumitomo avoids any market disruption that might result from the on-market sale of Nufarm shares owned by me," Mr Rathbone said.

"I am also pleased to see that Sumitomo intends to increase its strategic stake in Nufarm and continue to explore areas where the two companies can co-operate and build value for both businesses."

Mr Rathbone said he would use the proceeds of the sale to meet a personal tax liability that falls due this year.

He had "no current plans to sell down his remaining stake in Nufarm, which stands at 11,669,890 shares following the sale to Sumitomo".

In March 2010, Mr Rathbone sold three million Nufarm shares to pay down debt associated with his personal and family interests outside of Nufarm.

At the time, Mr Rathbone said he retained an interest of about 16 million shares in Nufarm.

He also said that in the long term it was his intention to hold 10 million shares.

Under the terms of the agreement between Nufarm and Sumitomo, Sumitomo cannot increase its shareholding in Nufarm beyond 23 per cent without the approval of the Nufarm board.

Alternatively, Sumitomo can make an offer to all Nufarm shareholders to acquire the company.