Laverton North, Victoria,
Australia
May 3, 2007
Nufarm Limited announced today that it has reached agreement
to acquire the 50.1% of
Agripec Quimica e Farmaceutica S.A (Agripec) it does not
already own. Final contracts and regulatory approvals are still
to be finalised.
Nufarm acquired 49.9% of Agripec –
then Brazil's largest locally owned crop protection company - in
2004 (acquisition was effective from August 1, 2004).
The acquisition of the remaining
equity in Agripec will take effect from June 1, 2007, with
completion scheduled for mid August. The purchase will be funded
with debt, with the price based on an agreed valuation for 100%
of Agripec of 700 million Brazilian real. The purchase price of
R$350 million will be paid in Brazilian currency (on current
exchange rates, the purchase price equates to approximately
AUD210 million).
Nufarm's Managing Director, Doug
Rathbone, said Brazil represents one of the world's most
exciting agricultural growth markets and the purchase of the
balance of Agripec will give Nufarm a valuable platform on which
to develop new business opportunities in South America.
"Given the confidence relating to
recovery and sustained growth in the Brazil farm sector, and
given our intentions to look at other opportunities in that
market, the time was right to step up and acquire the balance of
Agripec," said Mr Rathbone.
"We have a strong management team
in place and a good understanding of what is required to build
Agripec into a larger and more profitable business."
Mr Rathbone said the credit issues
that had adversely impacted the business in Brazil over the past
18 months will require careful ongoing assessment and
management, but stronger commodity prices and forecasts of
increased planting areas for the next two years will see the
business generate very acceptable profitability levels that will
meet Nufarm's EVA based investment return targets. The business
generates strong cash flows that will be used to service the
debt associated with this acquisition.
The existing major shareholder and
President of Agripec, Mr Beto Studart, will step down from his
position on completion of the transaction. The senior management
group will remain in place, with Nufarm appointing Marcos Lobo
as the new President of Agripec. Marcos – a Brazilian national -
has worked in a number of senior roles with Nufarm, and is
currently a Nufarm appointed director of Agripec.
"The business has very capable and
committed people; high quality production assets; strong brand
presence and an expanding product portfolio. I am extremely
confident that this development will strengthen our
opportunities as we see continued expansion of, and investment
in, agriculture in Brazil," Mr Rathbone concluded.
Agripec was established in 1961
and employs approximately 250 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 has operated on end-December financial year and
generated net 2006 sales of some R$350 million. The company has
an approximate 8% market share in Brazil, the world's second
largest crop protection market. The company has strong product
positions in glyphosate, phenoxies and a range of other
herbicides, as well as valuable fungicide and insecticide
positions. Currently, more than 60% of sales are directed into
the soybean segment (Brazil's largest crop), with new product
registrations aimed at increasing the company's sales
opportunities into other major crops such as corn, cotton,
citrus and sugar cane. |
