TOKYO -- Sumitomo Chemical will buy the South American operations of Australian agrichemical maker Nufarm for roughly 70 billion yen ($650 million), the Japanese company announced on Monday, in a deal partly driven by the U.S.-China trade war.
The move in soybean farm products, first reported by Nikkei, will expand the small South American footprint of one of the leading Japanese chemical groups, lifting the region above North America as the top contributor to revenue in the segment.
South America ranks as the world's biggest agrichemicals market, and its exports of soybeans and other commodities have gained added prominence as an alternative for China to U.S. farm goods.
The purchase will give the company sales networks for soybean farm weedkillers and other products in Brazil and Argentina, as well as its first factory in Brazil.
Brazil is the world's biggest exporter of soybeans, shipping around 76 million tons a year, according to the U.S. Department of Agriculture.
The country's soy farmers have reaped business lost by American growers during the tariff war. China imposed a 25% punitive additional tariff on U.S. soybeans in July 2018, raising it to 30% this September, although Beijing has said it will exempt American-grown soy from higher duties.
South America accounted for only about 10% of Sumitomo Chemical's roughly 300 billion yen in agrichemical sales in the year ended March, while North America made up around 30%.
The acquisition of Nufarm assets is expected to lift its annual South American agrichemical sales to more than 100 billion yen. Sumitomo Chemical aims to raise this further to 150 billion yen by 2025 as it introduces its high-selling products to the market.
Sumitomo Chemical ranks seventh globally in agrichemicals. Its South American acquisition follows a flurry of deals in the global agrichemicals industry.