China's state-owned Sinochem Group has stressed that discussions to buy Australian crop protection company Nufarm have only been preliminary in nature and the potential deal is but one of a number of international growth opportunities it is exploring.
The Australian Financial Review reports that in a brief statement issued yesterday, Sinochem confirmed what Nufarm told the market on Friday: it had initiated talks with the company regarding a potential takeover and there was no certainty that matters would progress further.
Nufarm was forced to reveal Sinochem's approach after the Australian Securities Exchange asked it to explain the steep rise in its share price from Wednesday to Thursday. The stock finished Thursday up 92¢ to $9.84 as speculation about Chinese interest intensified. It leapt another $1.28 to $11.12 on Friday when the explanation was provided.
The Australian Financial Review understands that Sinochem, China's largest chemical trader, is yet to decide whether it will undertake due diligence on Nufarm.
Sinochem is also believed to have been in the dark about Nufarm's second earnings downgrade in less than six weeks, issued on Friday.
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