Merger of Nihon Green & Garden with Hodogaya Agros

03-Mar-2003

Sumitomo Chemical Co., Ltd. (Sumitomo) and Hodogaya Chemical Co., Ltd. have agreed on the merger of Sumitomo's wholly-owned subsidiary Nihon Green & Garden Co., Ltd. (Nihon G&G) with the Sumitomo-Hodogaya 50/50 joint venture Hodogaya Agros Co., Ltd. (Hodogaya Agros), effective April 1 , 2003. With this move, the two companies aim to further strengthen and develop their agricultural chemicals business in non-farming areas such as home & garden, golf courses, forestry and railroads.

Japan's agricultural chemicals market is showing high growth potential in non-farming areas like home & garden and lawn applications, bolstered partly by the home gardening boom and an increasing public awareness of green development. As demand is expected to continue growing in these markets, Sumitomo has been working to expand its non-farming agricultural chemicals and materials business through Nihon G&G, a company it established for this purpose in October 200 1 . Sumitomo has also been looking into the opportunities of a business partnership to further strengthen this business.

Hodogaya Agros, established in 1 994 primarily to take over Hodogaya's agricultural chemicals operations, has been carrying out development, production and marketing of products such as non-farming agricultural chemicals under the assistance of the active ingredient makers. However, increased competitiveness through more efficient business management and an expanded product lineup were much needed. Sumitomo and Hodogaya reached the current agreement through the shared expectation of great benefits - such as a product lineup enriched with complementary flagship products, strengthened retail marketing abilities, and increased efficiency in R&D - to be gained by merging Nihon G&G with Hodogaya Agros, already well-connected with a number of herbicide makers in the area of focus.

Sumitomo Chemical has identified agricultural chemicals as a core business to promoting corporate growth, and views this merger as a major step in implementing ist business strategy of "expansion into peripheral areas" in agricultural chemicals. Sumitomo will position the new company as a development, promotion, and sales center for Sumitomo Chemical group's products in non-farming areas, to further enhance its presence in this field and to provide a base for future business expansion.

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