Nufarm (ASX:NUF) will sell its South American crop protection and seed treatment operations in Brazil, Argentina, Colombia and Chile ("Nufarm South America") to Japanese company Sumitomo Chemical Company for $1.18 billion.
Under the deal Nufarm and Sumitomo will enter into a two year supply agreement and transitional services agreement under which Nufarm will provide procurement services and continued supply of certain products to the South American businesses.
Nufarm says it will use the funds to pay down debt, reduce leverage and reduce Group financing costs.
The agricultural chemical company says this transaction represents compelling value for Nufarm shareholders and will provide an opportunity to refocus on other parts of the business where it can generate higher margins and stronger cash flow.
The Transaction is subject to shareholder approval under Chapter 10 of the ASX Listing Rules,
regulatory approvals and satisfaction of other conditions precedent.
Shares in Nufarm (ASX:NUF) closed 3 per cent higher at $4.46 on Friday.