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Australia's largest crop protection company Nufarm (ASX: NUF) has received one of the key regulatory green lights needed to offload its South American business to Sumitomo for $1.188 billion.
Brazil's General-Superintendent of the Administrative Council of Economic Defence (CADE) has provided clearance for the sale of Nufarm Brazil, which generated $960.9 million in revenue for Nufarm in FY19.
As a major soy producer, Brazil is the company's biggest source of sales by country worldwide.
CADE will shortly publish this decision in the Federal Official Gazette which will trigger a mandatory 15 day waiting period in which members of CADE's Administrative Tribunal can request the case for a second review.
Nufarm did not provide any new details on approval timelines for its businesses in Argentina, Colombia and Chile which form part of the sale, but it expects the transaction - involving crop protection and seed treatment assets - to be completed on 1 April.
The group forecasts loss of $10 million from its South American operations for the first quarter of this calendar year.
"This reflects the normal seasonal trading patterns of these businesses," Nufarm reports.
"The completion of the sale will have a favourable impact on Nufarm's financing costs and depreciation and amortisation costs."
If the transaction takes place as planned, Nufarm expects to report interest costs for continuing and discontinued businesses of approximately $90-$100 million for FY20.
Around $7 million of Nufarm's $12 million in foreign exchange costs for the first half relate to the South American divestment.
Nufarm has also confirmed its previous guidance of $55-65 million in first half underlying EBITDA.
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