Blackstone Inc (BX)

[lady*b]

Blackstone May Tighten
China Ties With Nufarm
Firm, ChemChina
Prepare Higher Bid
Of up to $4 Billion
By LAURA SANTINI
November 5, 2007

HONG KONG -- The unsolicited bid for Australia's Nufarm Ltd., which is being pursued by Blackstone Group LP and a Chinese state-owned chemical company, would tighten the U.S. private-equity firm's ties to China.

China National Chemical Corp., known as ChemChina, and Blackstone are in the preliminary stages of putting together a higher offer for the Australian agrichemical company, one that could approach US$4 billion, people close to the process say. Nufarm, which makes products for protecting crops against pests, weeds and disease, rejected an earlier offer that the bidders made in a letter dated Oct. 31, which would have valued the company at about US$2.7 billion, or 17.10 Australian dollars (US$15.79) a share, the people say.

Nufarm shares surged 13% Wednesday to A$15.60, but trading has been halted since then. Nufarm told the Australian Securities Exchange that it plans to make an announcement before trading begins Monday.

A ChemChina spokesman declined to comment.

Blackstone, the world's largest private-equity firm by fund size, has raised its profile in China in recent months, after having entered the market much later than many of its rivals. In September, Blackstone bought 20% of a ChemChina subsidiary called China National BlueStar (Group) Corp.

The deal followed two groundbreaking announcements: The Chinese government in May acquired a $3 billion stake in Blackstone's management company and this summer Blackstone played an advisory role in China Development Bank's $13.5 billion investment in British bank Barclays PLC.

Blackstone's prowess on the deal scene is expected to give ChemChina an advantage in getting a deal done relatively swiftly. Private-equity funds clamoring for transactions on the mainland have pitched their deal expertise to Chinese companies as a clear benefit to partnering with them. One prominent example of this occurred in 2005, when TPG invested in Lenovo Group, providing US$350 million in capital that was used to finance the purchase of International Business Machines Corp.'s personal-computer unit.

ChemChina has been scouting opportunities to acquire new assets, especially overseas, establishing contacts in Europe, Australia and domestically, says Zhang Wenlei, secretary-general of the China Chlor-Alkali Industry Association. Australia has had US$94.7 billion in mergers and acquisitions so far this year, 9% higher than in 2006, according to Dealogic.

--Ellen Zhu in Shanghai contributed to this article.
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