Sumitomo plans two exits
Japan’s Sumitomo Chemical has decided to sell its 15.9% stake in Australian agrochemical company Nufarm. It has separately announced its decision to close down its dyestuff facilities at its Osaka Works and exit the dyestuffs business by the end of March 2023.
The company originally took a 20% stake in Nufarm in 2010 and also acquired four subsidiaries of Nufarm in South America in 2020. The two also formed a comprehensive business alliance, which will continue after the dissolution of the capital relationship.
“For each of its strategic shareholdings in other companies, every year Sumitomo Chemical evaluates their medium- to long-term economic rationality and significance, and it determined the sale of its shareholding in Nufarm in accordance with this policy,” the company stated.
The Financial Review, however, described the course of the investment as “painful”, noting that Sumitomo bought in at $14/share and finally sold its stake for $5.38/share. Soon after it bought into Nufarm, the market became flooded with cheaper Chinese competition.
Sumitomo Chemical had been making dyestuff products for clothes since 1944, which led on to expertise in organic synthesis that is now applied in its pharmaceutical and crop protection businesses. However, it said, the challenging environment and increasingly onerous maintenance and repair costs at the ageing facilities meant that “it will be unable to steadily generate profits from the business over the medium to long term”.