TOKYO -- Japanese trading house Mitsui & Co. is purchasing agrichemical business assets from Monsanto in a deal apparently worth around 10 billion yen ($86.5 million), a move prompted by the dramatic realignment of the global crop industry.
Mitsui will acquire intellectual property rights associated with Latitude, the seed coating effective in fighting a crop disease that occurs after replanting wheat and barley. Assets being transferred include licensing, trademark and selling rights for the chemical. Latitude enjoys a virtual monopoly in Europe, where crops are typically cultivated in the same field for two consecutive years or more.
Monsanto markets Latitude in over 10 countries, mainly in Europe. Mitsui will sell the product in Britain, France, Germany and other western European nations via Dutch subsidiary Certis Europe and German unit Spiess-Urania Chemicals. Latitude draws around 10 billion yen in annual sales, though Mitsui seeks to boost that figure by at least 20-30%.
Mitsui sells agrichemicals in Europe produced by Nippon Soda, Kumiai Chemical Industry and other Japanese manufacturers. Expanding its lineup of seed treatments, which are seeing rising demand, and adding more points of contact with clients will let Mitsui boost sales of Japanese-made products.
In 2014, Mitsui purchased assets for fungicides used to protect citrus plants from U.S. chemical giant DuPont. Global groups are shedding and consolidating agrichemical and related businesses amid a larger realignment.
Monsanto, the U.S. seed maker, agreed to a takeover by German agrichemical major Bayer in September 2016. The pair plan to concentrate on their respective areas of expertise. Mitsui seeks opportunities to pick up noncore operations being jettisoned amid the industry shakeup.
Mitsui earns 50 billion yen to 60 billion yen annually from its agrichemicals business, with Europe accounting for 25 billion to 30 billion yen. The Japanese multinational also manufactures and sells agrichemicals in the U.S. Mitsui looks to expand its sales network to Brazil, Argentina and Australia -- large grain-producing nations where the company has no base of operations. Mitsui aims to boost the sector's annual sales to 100 billion yen within five years.