Sumitomo Chemical to Enhance Crop Protection Sales Network in South America with Acquisition of Four South American Subsidiaries of Nufarm
Sep. 30, 2019
Sumitomo Chemical Company, Limited (“Sumitomo Chemical”) announced today that it has agreed with Nufarm Ltd. (“Nufarm”), the leading crop protection company in Australia, to acquire all shares of Nufarm’s four South American subsidiaries in Brazil, Argentina, Chile and Colombia, through Sumitomo Chemical's fully owned subsidiaries in the region, i.e. Sumitomo Chemical Brazil for the Brazilian subsidiary, and Sumitomo Chemical Chile for the others. The acquisition is due to be completed upon approval by Nufarm’s shareholders’ meeting scheduled for December this year, subject to clearance by relevant regulatory authorities.
The crop protection market in South America currently accounts for approximately 25 percent of the world market, which is larger than North America or China. Among countries in the region, Brazil has the world’s largest crop protection market with a huge demand especially for soybean treatments. Argentina is one of the world’s leading agricultural countries. Against the backdrop of increasing global food demand, the crop protection market demand in the region is expected to grow further in the future.
Since the start of development and sales of crop protection business at Valent U.S.A. LLC in 1988, Sumitomo Chemical has been expanding its crop protection business in North America, which now accounts for about 30% of the Company's revenue from the global crop protection business. In 2010, Sumitomo Chemical made a strategic investment in Nufarm and initiated a comprehensive business collaboration, principally through distribution alliances in 31 countries worldwide, generating substantial synergies from the collaboration. In parallel with these initiatives, Sumitomo Chemical has constantly extended its global reach, broadening a network of global footprints (building its own distribution networks), as demonstrated notably by a series of recent undertakings in India, acquiring an Indian crop protection company in 2016, merging the acquired company with the Company's other subsidiary in India, and making a further move to list the new company on the National Stock Exchanges in the country.
As a result of the acquisition announced time, the crop protection revenue of Sumitomo Chemical in South America will triple, surpassing its revenue in North America. In addition, the Company can build a solid in-house sales system for crop protection chemicals in this region, which is the world's largest market and is expected to grow. More importantly, the acquisition will give a powerful impetus to the Company's ongoing projects to establish a network of its global footprints. Among the Company's products to benefit directly from the acquisition is INDIFLIN™, a novel fungicide active ingredient, discovered by Sumitomo Chemical, to be launched in 2020 or later, which has a high efficacy against major plant diseases such as Asian Soybean Rust. Sumitomo Chemical has been working jointly with Nufarm to develop mixtures containing INDIFLIN™, and the acquisition will accelerate this development and also enhance the line-up of related crop protection products. Also, the strengthened footprints in Latin America will enable Sumitomo Chemical to begin realizing a solid growth of INDIFLIN™ sales immediately after it is launched and to achieve a significant growth in crop protection revenue in the Latin American markets. Furthermore, the acquisition will provide Sumitomo Chemical with an opportunity to pursue the integration of business operations, from development through formulation to distribution, because a formulation plant the Company will obtain as part of the acquisition can be managed and operated closely with its existing R&D facility and its adjoining experimental field.
Sumitomo Chemical Representative Director and Executive Vice President Ray Nishimoto commented, “Nufarm has a strong distribution network solidly built in South America, and this transaction will realize significant value for shareholders of each company. We look forward to continuing our long-term relationship with Nufarm as a strategic partner and a major shareholder.”
Nufarm Managing Director and CEO Greg Hunt confirmed Nufarm’s relationship with Sumitomo would be further strengthened by the proposed agreement. “Our commercial relationship with Sumitomo provides access to an attractive portfolio of proprietary products and will continue to be an important contributor to our growth. Today’s agreement extends the term of our existing relationship and provides new opportunities to build on our expanding product portfolio in Europe.”
Maximizing the benefit of this acquisition as a strong growth driver in the crop protection business, Sumitomo Chemical will further work to make its Health & Crop Sciences Sector grow and expand. In addition, Sumitomo Chemical will make unabated efforts to offer solutions catering to the specific needs of growers, contributing to ensuring the stable supply of safe and secure food, which is in growing demand worldwide.
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