The $100m Roundup rights contract which Monsanto removed from Nufarm has been awarded to China's Sinochem, deepening closely-watched ties between the US seed giant and the state-run chemicals conglomerate.

Nufarm on Tuesday revealed that Monsanto had, after 11 years, withdrawn the rights to distribute the Roundup glyphosate weedkiller in the region – an announcement which sent its shares plunging 12%.

On Wednesday, Monsanto revealed that it had switched the contract to Sinochem, the state-controlled Chinese chemicals group with which it has been building ties since forming a joint venture in hybrid seeds 12 years ago.

Sinochem already sells Roundup in China and the Philippines

"Sinochem has been an excellent global partner and we believe they will do an outstanding job serving our customers in Australia and New Zealand through this new agreement," Mike Frank, the head of Monsanto's international row crops and global vegetable business, said.

Tie-up talks

Sinochem, which in 2009 launched a failed Aus$2.6 attempt to buy Nufarm, has built an Australian agrichemicals division largely around former Monsanto staff.

Roger Angell, the Sinochem Australia managing director, a former regional head for Monsanto. Richard Jagger, the Sinochem Australia commercial manager, and Michael Summons, country leader for New Zealand, are also former senior Monsanto staff.

Relations between Monsanto and Sinochem came under particular scrutiny two years ago, when the two groups were revealed to be involved in talks over strengthening ties, potentially through equity stakes or a larger joint venture.

Monsanto was seen as seeking a fast track into the Chinese market, and Sinochem access to the US group's seed technology, in a country where yields lag far behind Western levels, although in which genetically modified varieties have gained limited approvals.

PotashCorp, the Canadian fertilizer group, owns a stake in Sinochem's listed nutrient subsidiary, Sinofert.

'Potential target'

For Nufarm, the loss of the Roundup contract, worth roughly $100m a year, represented "terrible timing" after the group last month lost rights to sell agrichemicals made by Germany's BASF, broker RBS Morgans said.

However, RBS Morgans analyst Belinda Moore termed the slump in Nufarm shares on Tuesday an overreaction given the potential for the group to boost sales of its own glyphosate products - and indeed its potential to become an acquisition target again.

"If Archer Daniels Midland is successful in taking over GrainCorp, Nufarm will become the largest and most liquid agribusiness on the ASX," Ms Moore said.

"Nufarm is also a potential target, with Sumitomo Chemical owning 23% of the company."

Macquarie lifted its rating on Nufarm shares to "neutral" from "underperform", with a price target of Aus$5.90, viewing Tuesday's sell-off as "overdone", while Credit Suisse lifted its recommendation to "outperform" from "underperform".

Nufarm shares rebounded 6.4% to Aus$5.16 on Wednesday.