The Nufarm Limited (ASX: NUF) share price has rocketed 25% to $5.56 this lunchtime after the industrials and agricultural chemical company revealed it will sell Nufarm South America to Sumitomo Chemical Company Limited ("Sumitomo") for $1,188 million cash.
The deal is on strong multiple of around 10x fiscal 2019's adjusted EBITDA for Nufarm South America.
At the same time Nufarm reported it has entered into other new commercial agreements or extended existing ones with Sumitomo.
The stock has been well backed by high profile fundies such as Patrick Hodgens' Firetrail Funds Management and the L1 Long Short Fund Ltd (ASX: LSF) who'll be pleased today given Nufarm has delivered poor returns over the past 12 months.
In fact it's still changing hands well below the $6.49 price this time last year.
Part of the problem has been Nufarm's creaking balance sheet with today's deal seeing it use the proceeds to reduce leverage or net debt to underlying EBITDA from 3x to 0.7x and financing costs by $60 million to $70 million on a fiscal 2019 pro forma basis.
