Sinochem picks up rights to sell Roundup
Three former Monsanto executives, local managers of Chinese-backed Sinochem, have emerged with the Australian distribution rights for the pesticide Roundup, one day after Nufarm lost them.
Nufarm shares fell 12 per cent on Tuesday after the company announced it had lost the exclusive rights to sell Roundup, made by Monsanto, which it had held since 2002. But Nufarm shares recovered more than 6 per cent to close at $5.16 on Wednesday as investors picked a buying opportunity.
Sinochem Australia, a fully owned subsidiary of Chinese-based global chemical firm Sinochem International - which mounted an unsuccessful friendly bid for Nufarm in 2009 - announced it had been given the rights by Monsanto, effective from September.
Sinochem Australia managing director Roger Angell, commercial manager Richard Jagger and operations manager Michael Summons have all held senior positions with Monsanto.
Mr Angell said Sinochem and Monsanto would commit "significant resources to the marketing and development of Roundup brands in Australia and New Zealand".
Nufarm spokesman Robert Reis said the Sinochem deal was "news to us" but stressed "we're not losing a product, we're losing a brand. We will still have the ability to continue marketing glyphosate - the chemistry - with our own brands."
Mr Reis said that while Sinochem was starting from scratch in Australia, "we've got a long history in this business [and] we'll step up".
RBS Morgans agribusiness analyst Belinda Moore said the loss of the Roundup rights was unexpected and "terrible timing" given Nufarm in January lost its rights to sell crop-protection products made by German conglomerate BASF.
But Ms Moore said Tuesday's sharp sales were an overreaction and Nufarm could claw back a significant portion of the lost sales. "Nufarm will have a very competitive product in the market - it may well be exactly the same but a lot cheaper than these [Sinochem] guys will be selling".
Ms Moore said Nufarm was trading at a discount to its peers and was a potential takeover target with Sumitomo Chemical owning 23 per cent of the company.