AGRICULTURAL chemicals supplier Nufarm Ltd says $13 a share is a fair price for its business and is continuing takeover talks with Chinese state-owned Sinochem Corp.

Nufarm also yesterday said its profit for the first half of its fiscal year will be significantly lower than the previous corresponding period.

However, the operating profit for the full year is expected to show meaningful growth.

Nufarm chairman Kerry Hoggard told shareholders at the company's annual general meeting yesterday that Nufarm would continue to hold talks with Sinochem about a potential recommended takeover at $13 per Nufarm share.

The indicative offer by Sinochem values Nufarm at about $2.8 billion.

Nufarm shares closed up 34 cents at $10.85 yesterday.

Sinochem has a new deadline of December 23 to executive a transaction implementation agreement for the deal after it was unable to meet a December 3 deadline because it was assessing findings from its due diligence process.

Mr Hoggard said talks with Sinochem would be conducted on a non-exclusive basis from December 4 until December 23.

Mr Hoggard told reporters that the Nufarm board would keep talking to Sinochem, as long as Sinochem was still offering $13 per Nufarm share.

"The board's position is that we believe $13 is a fair price for Nufarm and that's the number that we would recommend to shareholders," Mr Hoggard said.

Nufarm managing director Doug Rathbone told reporters that he could not comment on whether or not other parties had approached Nufarm about potential alternative takeover offers.

"Exclusivity is finished today and we'll see what happens," Mr Rathbone said.

Mr Rathbone declined to elaborate upon issues Sinochem had raised during the due diligence process.

Mr Hoggard said the issues were "not black or white" but included long-term forecasts and exchange rates.

"There's nothing in there that's not unexpected," Mr Hoggard told reporters.

Mr Hoggard earlier told shareholders that the group's first half profit for fiscal 2010 would be "significantly down on the previous year but in line with our internal projections".

Nufarm currently expects full year operating profit to show "meaningful" growth.

"Both cash flow and balance sheet strength will improve," Mr Hoggard said.

Nufarm's fiscal 2009 net trading result fell 42.1 per cent to $79.88 million after credit-related pressures in Brazil resulted in fewer sales and a squeeze on margins.

Nufarms' 2009 profit was also affected by continued drought and an increase in production by China of the herbicide glyphosate, which resulted in an oversupply and a dramatic fall in selling prices for the weedkiller.

Glyphosate is Nufarm's largest individual product and in a normal year represents 35 to 40 per cent of international sales.

Mr Hoggard said glyphosate raw materials were now being purchased at market competitive prices and Nufarm's margins would start to recover in 2010.

Mr Rathbone told shareholders that the recovery of the glyphosate market would take the "next couple of seasons".
He said the glyphosate picture would take some time to come into focus.

"Our expectations were for this, the 2010 year, to be somewhat of a transition period, with excess inventory making its way into distribution channels and prices remaining competitive," Mr Rathbone told shareholders.

Mr Rathbone said Nufarm remained focused on broadening its product offerings in Brazil in crop segments such as sugar cane, pasture and citrus.

"I believe a more diversified exposure in Brazil is an important component of our risk management and better positions Nufarm to capitalise as market conditions inevitably will improve," he said.

Mr Rathbone also said Nufarm was seeing some encouraging signs in its Australian business.

"Recent months have seen some strong rainfalls in many cropping regions," he said.

"This is not ideal timing for growers wanting to harvest their crops, but it does point to reasonable summer cropping conditions and the business that will generate."