“The investment followed the execution of a collaboration memorandum of understanding (MoU) in January 2010 that envisages a strategic global alliance between the two companies,” Mr Brookes said. “While this development may have taken the local market by surprise at the time, it was absolutely consistent with the strategic direction of the Sumitomo Chemical board for ongoing investment in its life science businesses, including acquisition opportunities.”

 

Sumitomo Chemical operates six divisions globally. These include agricultural chemicals and pharmaceuticals, which have performed well in recent years and feature prominently in growth projections for the company’s mid to long term plans.

 

Mr Brookes said the investment in Nufarm followed recent initiatives to strengthen Sumitomo’s pharmaceutical business globally. “The potential value of the Nufarm investment lies also in the MoU, which stands to see both companies benefit significantly from global cooperation,” he said.

 

“Business activities identified for cooperation, subject to further negotiations, include certain geographic distribution opportunities, joint R&D activities and manufacturing economies.” He conceded that the local industry is curious to see what, if anything, unfolds in Australia but said the key immediate opportunities for both companies have been identified as cooperation in certain jurisdictions outside Australia.

 

“In Australia, both Nufarm and Sumitomo operate successfully, albeit on quite different scales,” he said. “Our business is focused on Sumitomo’s proprietary range of conventional and biological insecticides, plant growth regulators and environmental health products. The strategy behind our local R&D activities has been to focus on opportunities for new products in high value markets wherever possible.

 

“Agriculture is our core business – horticulture and cotton in particular – while public health activities ranging from council mosquito control programs to household aerosols are also important.

 

“Nufarm operates very successfully at the high volume end of the market. Locally they are leaders in manufacturing, logistics, customer service and product life cycle management.

 

“So we are talking about two quite different business models often targeting different market segments.

 

“While there are some significant opportunities for local cooperation between Sumitomo Chemical Australia and Nufarm, it is understood that both companies will continue to operate on the presumption of business as usual.”