BREAKFAST DEALS: Selling the farm

Nufarm's plan to raise capital after selling 20 per cent of its stock Sumitomo raises questions about what directors will do with their own shares.

Nufarm, Sinochem Corp, Sumitomo Chemical Company

Nufarm has stuck by its word that it would not accept a takeover offer that valued it at less than $13 per share. The agrichemicals group has rejected a lowered $12 per share offer from China's Sinochem Corp in favour of a deal with Sumitomo Chemical Company whereby the Japanese company will buy 20 per cent of the company via a tender offer at $14 per share. Nufarm will also undertake a $250 million capital raising, underwritten by adviser UBS. The decision caps a dramatic month for the crop protection group: its exclusivity agreement with Sinochem lapsed on December 3, to be followed by a "disappointing” revised offer which sliced more than $200 million from the original proposal. Enter Sumitomo, which had originally approached Nufarm in August and saw an opportunity this month as the target and Sinochem wrangled over price. Under the Sumitomo deal, the agricultural chemicals group will become the biggest shareholder in the Melbourne-based Nufarm. The offer is expected to be on a 1-for-10 basis, says The Australian, leaving open the possibility of selling for $14 and reinvesting at a discount. It is not yet known what Nufarm directors will do with their holdings. A company spokesman has told Bloomberg it wants to take advantage of Nufarm's sales network and research and development. Sinochem, for its part, says it regrets Nufarm's decision, and has stood by its lowered offer, describing it as fair. As for Nufarm, it has refinanced debt worth about $1 billion, and now has a bit of breathing room after S&P warned of a ratings downgrade should the Sinochem deal fall through. In any event, yesterday's announcement was a twist, prompting some to argue that Sinochem overplayed its hand while others say Nufarm was lucky to have an alternative suitor in waiting given this year's profit downgrades. There's also talk of third time lucky for China: Sumitomo cannot built up a blocking stake under the deal and must either match or accept a future offer, so Sinochem could, in theory, return with a more attractive proposal, should it have the stomach. Sumitomo Chemical is advised by Socit Gnrale, Sincochem by the Royal Bank of Scotland.

Hunan Valin Steel

Still in China, and acquisitions are tipped for Hunan Valin Steel Co as the steelmaker and Fortescue Metals shareholder mulls a Hong Kong listing. Industry insiders have told the China Daily the listing plan is designed to help overseas acquisitions and capacity expansion. The chairman of Hunan Valin has been quoted this week as saying that the company's parent, Hunan Valin Iron & Steel Group, plans to raise as much as 10 billion yuan ($1.63 billion) in the offering.

Avoca Resources, Dioro Exploration, Ramelius Resources

Another months-long takeover battle now coming to an end is the quest for the dual-listed Dioro Exploration, owner of the prized Frog's Legs gold mine in WA. Weeks after Ramelius Resources declared its hand with a 'full and final' offer, another gold producer and major shareholder, Avoca Resources, has boosted its cash and scrip offer. The sweetened offer values Dioro at $1.25 per share or $115 million, compared with Ramelius' offer as at December 18 of $1.16 per share or $106 million. The Dioro board is now faced with two final offers from two major shareholders; Avoca holds 45 per cent with an option for a further 3 per cent, while Ramelius has a 36 per cent stake. Avoca chairman Robert Reynolds has told AAP he is "quietly confident” of getting Dioro board support. And in a similar vein to National Australia Bank's surprise proposal for AXA Asia Pacific's local and New Zealand assets, which came after AMP imposed a one-week deadline on its target, Reynolds said the 'full and final' call by Ramelius gave his company an opportunity. "We didn't want to get involved in a bidding war, so we let them carry on,” he is quoted as saying. He's also hoping the cash component and premium will convince Dioro's near 20 per cent independent shareholders.

Rocklands Richfield, Meijin Energy Group, Jindal Steel & Power

Back home but still with an overseas flavour, and coal explorer and metallurgical coke manufacturer Rocklands Richfield has two persistent would-be suitors on its hands. China's Meijin Energy Company has sweetened its preliminary proposal to 56 cents per share, from 52 cents. The revised proposal values the Perth-based company at $197 million, well above a $154 million proposal from 16.4 per cent shareholder, India's Jindal Steel & Power. Jindal, meanwhile, has been given until late today to increase its proposal by 4 cents per share, thereby matching Meijin's proposal. An earlier exclusivity agreement between Rocklands and Jindal precludes the target from talking to Meijin. Meijin, one of China's largest coke producers, has proposed acquiring more than 19.9 per cent and as much 100 per cent of Rocklands. Whatever happens, Rocklands shareholders have had a good ride in the last few months, having come into August trading at 10 cents and closing yesterday at 42 cents, the price of Jindal's original proposal. Still, the share price discount to the Meijin's proposal suggests there is still some caution, likely on price or government approval, with Rocklands warning yesterday that the proposals might not become formal offers.

Wrapping up

Good news for Amcor, with US authorities clearing the packaging company's purchase of the bulk of Alcan Packaging's operation from Rio Tinto although an antitrust review will look into the purchase of Alcan's Medical Flexible operations. Amcor has agreed to plant sales in Europe to get the $US2 billion purchase across the line. Over to the banks, and the Royal Bank of Scotland's Australian subsidiary swung to a $144 million loss in 2008, according to the Sydney Morning Herald, after revenue slumped more than 60 per cent. And Goldman Sachs Group came out top in a bad year for US IPOs, according to preliminary Bloomberg figures, taking in $US191.6 million for its work with companies such as Hyatt Hotels Corp. Not such a good year for Citigroup, which saw its revenue more than halve. Still, that's about trend, with the amount raised by US companies from IPO almost halving to $US16.4 billion, according to the figures.