By Caroline Henshaw and Ross Kelly
CANBERRA--Monsanto Co. (MON) Wednesday awarded a potentially
lucrative contract to distribute its crop protection products in
Australia and New Zealand to China's Sinochem, a day after
terminating a decade-long deal with Nufarm Ltd. (NUF.AM).
The move builds on existing ties with Sinochem that involve the
Chinese state-owned chemicals giant selling Monsanto's Roundup
brand in China and the Philippines. It also marks the biggest push
by Sinochem into the Australian market since it abandoned a 2.62
billion Australian dollar (US$2.70 billion) takeover bid for Nufarm
in 2009.
Global agriculture companies are vying for a greater share of
Australia's farm sector, which is located on the doorstep of
fast-growing Asian economies like China that have a growing
appetite for Western-style diets.
Sinochem will become sole distributor of Roundup in Australia
and New Zealand in September, but can start selling it on a
non-exclusive basis three months earlier.
"Sinochem has been an excellent global partner and we believe
they will do an outstanding job serving our customers in Australia
and New Zealand through this new agreement," Mike Frank, head of
Monsanto's international row crops and global vegetable business,
said in a statement.
Sinochem's Australian unit, based in Melbourne, is run by
several former Monsanto executives. Managing Director Roger Angell
is Monsanto's former head of Australia and New Zealand.
Mr. Angell said the deal gives Sinochem the opportunity to
introduce its own products to the region, in addition to
distributing Roundup.
"As our business grows in Australia we will be looking to
formulate and produce some of our product at Australian plants,"
Mr. Angell said.
U.S.-based Monsanto's deal with Nufarm, to be terminated
officially Aug. 28, was worth A$100 million in sales last year. It
was the second major contract loss for Nufarm in as many months
after German chemical company BASF SE (BAS.XE) said in January it
plans to re-enter the Australian farm market as a solo player next
year.
The termination of the Monsanto contract sent Nufarm shares
plummeting 12.1% Tuesday. By 0345 Wednesday, Nufarm shares pulled
back some of the losses, rising 6.6% as brokers said the fall was
overdone and RBS Morgans said Nufarm is a potential takeover
target.
-Write to Caroline Henshaw at caroline.henshaw@wsj.com and
ross.kelly@wsj.com
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