Fuhua Group acquires 5.16% share of Nufarm

Date:03-24-2016

Zhanghua, the chairman of one of China's biggest glyphosate producer Fuhua Group, has secured a substantial holding in Nufarm, sparking speculation about a potential takeover on the eve of the crop protection group's interim results.

Zhang Hua informed Nufarm and the Australian Securities Exchange on Tuesday that he, and British Virgin Island companies he controls, had been buying shares since November and had obtained a 5.16 per cent stake.

In a statement to the ASX, Mr Zhang said the transaction was "currently" intended as a financial transaction but reserved the right to increase or decrease the holding "from time to time". "The holders have no current intention to seek control of Nufarm (via a takeover or otherwise), to request a board seat, or to control or influence the composition of Nufarm's board or the conduct of its affairs," Mr Zhang said.The holding in Nufarm, that includes a collar agreement with UBS, has been acquired for Mr Zhang and his controlled entities Power Growth Global and Brecken International.

Sources said Mr Zhang had been a shareholder in Nufarm for about two years but had kept his position below 5 per cent, which meant he did not have to publicly disclose his holding.

Mr Zhang's statement did little to deflate speculation amid industry consolidation around the globe.

"Globally the agri-chemical sector is consolidating," said Morgan's analyst Belinda Moore. "Everyone is talking and everyone is looking for a dance partner and they are going for big multiples."

A spokeswoman for Nufarm said the crop protection group had a good relationship with Mr Zhang.

"He is the chairman of Fuhua, an agricultural technology investment group," the spokeswoman said.

"Fuhua are an important supplier to the crop protection industry. Mr Zhang Hua has clearly outlined his intentions in the covering letter to the ASX filing."

Glyphosate is a key ingredient in the weed killer commonly known as Roundup, a product distributed by Monsanto.

State-backed China National Chemical has stumped up $US43 billion ($56.6 billion) to buy Swiss pesticide and seeds maker Syngenta, marking the largest acquisition by a Chinese company.

Meanwhile, chemical giants Dow Chemical and DuPont are planning to merge this year.

Japan's Sumitomo Chemical Company grabbed a 20 per cent stake in Nufarm at $14 a share in 2009 after Nufarm rebuffed a $12-a-share takeover bid from China's SinoChem.

Sumitomo lifted its stake to 23 per cent but under an agreement with the board it is understood it must either match a takeover bid or sell in to one.