Chemical supplier Nufarm is raising $446 million from shareholders for a long tipped expansion of its offshore operations – but it will be in Europe rather than the US.
The company told the ASX yesterday that the raising will be used to fund the $691 million acquisition of a portfolio of crop protection products based in Europe.
And it hinted that it is eying a further purchase which if it happens would lift the cost to more than $800 million.
The European purchases involve exsisting brands of herbicides, fungicides, insecticides, seed treatments and plant growth regulators sold in 29 countries including Germany, Spain, France and Italy.
Nufarm said the acquisition from Adama Agricultural Solutions, Syngenta Crop Protection and related companies and covered more than 50 formulations and more than 260 registrations.
Nufarm said the deal included additional registrations for new products currently being reviewed for regulatory approval.
The company plans to fund the deal using $272 million from existing debt facilities and the $446 million fully underwritten equity raising. The company will also buy existing product inventory for about $50 million after completing the deal, it said. The fund raising will be a two for nine issue at $7.50 a share (compared to the last price of $8.73).
Around 59.5 million shares will be issued under the two part issue – the first is being made to institutions which is expected to complete by Thursday and the second part will be made to retail shareholders and will be renounceable from this Friday to November 8.
It expects the portfolio to contribute roughly $250 million in net sales and between $95 million and $100 million in earnings in the 2019 financial year.
Chief executive Greg Hunt said the acquisition would strengthen the supplier’s presence in Europe, where it generated its highest crop protection margins.
"We will extend our reach into the European market via both a more significant position with existing distribution customers, and by accessing new customers," Mr Hunt said.
Nufarm revealed it is currently also in exclusive discussions with another party to acquire a crop protection portfolio for less than $US100 million ($128 million).
It said it expected to finalise this acquisition in the next few weeks.
Prior to this deal Nufarm has looked at one buy in the US but it was snapped up by a rival at a price out of the company’s range. Nufarm shares are in a trading halt at a last price of $8.73.
