Sinochem Corp (Sinochem), the country's leading agrochemicals producer, Monday said it agreed in principle to buy Australia's Nufarm Ltd for A$2.8 billion, in a move to expand its farm chemicals business overseas.

Sinochem Monday signed agreements with Nufarm, under which the company would offer A$13 per Nufarm share, the Australian company said in a statement. The price is a near 17-percent premium to Nufarm's last traded price.

The acquisition of Nufarm, should it proceed, is consistent with Sinochem's strategy to become a leading global company in the total crop protection value chain including research and development, production, distribution and services, Sinochem added.

"The potential acquisition of Nufarm will accelerate Sinochem's ambitious global growth strategy in agricultural inputs," said the statement.

The deal is subject to approval from regulators in both China and Australia, Nufarm shareholders, the Australian court and to no material adverse change in Nufarm's business prior to completion of a transaction.

Sinochem is being assisted by the Royal Bank of Scotland as financial adviser and Blake Dawson as legal adviser.

Analysts said the deal would expand Sinochem's manufacturing facilities of pesticides and herbicides, as well as extend its overseas network.

The deal would enable Sinochem to have a foothold in Australia and the Americas. It is in line with the company's overseas strategy, Chen Lei of China Galaxy Securities told China Daily.

This is the second time that a Chinese company has shown interest in Nufarm. In 2007, China National Chemical Corp (ChemChina) and two US private equity firms agreed to pay A$3 billion in cash for the company.

The Nufarm deal is "one of a range of potential growth opportunities that Sinochem is currently exploring," the company earlier stated.

The State-owned company's parent Sinochem Group, which is also China's fourth-largest oil company, earlier said it has got permission to participate in Iraq's second auction of oil and gas fields in November.

The company is one of 45 qualified to participate in the second bidding round. It now has overseas exploration and production rights in 14 oil and gas blocks in six countries.

Sinochem Group earlier participated in the first bidding round for Iraqi oil fields in June.

Analysts said the move shows that domestic oil companies are increasingly looking toward Iraq, which has the third largest proved oil reserves in the world.

(China Daily September 29, 2009)