Tomen and Nichimen to Merge Life Science Businesses New Entity Will Form Japan's Most Highly Functional Company in the Field
2001-01-09
Tomen and Nichimen Corporation today jointly announced that they will spin off their life science businesses and merge them into an independent company to create Japan's most highly functional company specializing in the life science business. Their life science activities include agrochemicals, pharmaceuticals, veterinary medicines and biotechnology businesses. Tomen also announced it will call a shareholders' meeting on this subject to be held on March 22, 2001. The new entity, which will have 130 employees and 1400 employees including its affiliated companies, will be a consolidated subsidiary of Tomen. Tomen and Nichimen each will hold 40% of the shares while Tomen group companies and strategic partners will hold the rest. The new president will come from Tomen.
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Mr.Tashiro, President of Tomen(left),
Mr.Hanbayashi, President of Nichimen. |
Tomen has invited Toyota Tsusho Corp., the trading arm of the Toyota Group, to acquire a stake of the new subsidiary as Tomen's strategic partner.
Mr. Morihiko Tashiro, president of Tomen said, "Tomen's agrochemical business is our top core business. We are committed to seeking out opportunities for business alliances that will solidify our base. This new venture is an excellent example of this policy and we anticipate that it will lead to heightened corporate value and increased consolidated profit for the Tomen Group."
Mr. Toru Hanbayashi, President of Nichimen, commented that the new company will benefit Nichimen as well. He said, "Joining our strong downstream with Tomen's upstream capabilities will enable us to compete more aggressively, and show strong financial results in the coming years, providing a win-win proposition for us as major shareholders in the new venture."
Tomen has a unique position in the agrochemical industry. In addition to its traditional function as a trading house, Tomen has solidified its basic producer position acquiring the business rights of a variety of agrochemicals, and brings its R&D capabilities to the new company. On the other hand, Nichimen has established a strong market position developing its own global sales network. These combined strengths in upstream and downstream of the agrochemical market will further strengthen its position as an industry leader. The two companies' decision to integrate their assets enables them to create Japan's most highly functional agrochemical company, engaging in R&D, registration, production and sales worldwide.
In the areas of pharmaceuticals and veterinary medicines, Tomen and Nichimen expect to maximize the benefits of their new synergy and to create a life science company engaging in a broad range of areas including biotechnology.
The merger makes the rapid expansion of new businesses possible. Their complementary functions create a worldwide sales network that will enable a substantial increase in profitability for the company.
Benefits of the new company
The merger enables the full production to market process to be conducted by in-group companies. Strengths of the formerly separate companies complement each other to create a fully capable intra-group process. Tomen brings the strength of basic chemical production, the first step in the process while Nichimen brings strong formulation capabilities and each brings sales forces from different parts of the world to create a worldwide sales force network.
| 1. | Complementary benefits |
| a. | Stronger sales force: Tomen brings a sales force focusing in Japan, North America, Central America and South America while Nichimen brings sales forces in Asia, Europe, Mid-East and Africa, creating a global network. |
| b. | Manufacturing ability: Tomen's manufacturing capabilities include production of basic chemicals in the United States, and toll manufacturing in Japan, the US, and China with outsourcing of intermediate agrochemicals. Nichimen does toll manufacturing in Europe, India and Korea. |
| c. | Formulation: Tomen does formulation in Brazil while Nichimen does formulation in 10 countries including France and African countries. The new company will be able to utilize more in-house facilities in the agrochemical formulation process. |
| 2. | Cost efficiency |
| a. | The merged company will increase profits because of its ability to produce agrochemicals utilizing facilities inside the expanded group, limiting reliance on outsourcing. |
| b. | The integration of global offices and other administrative cost saving measures will maximize cost reductions. |
| 3. | Synergistic effects |
| a. | The new company will generate increased appreciation by other manufacturers through the stronger sales force network, which will create more product sales worldwide. |
| b. | Increased profitability is expected because of the expansion and improvement of the sales subsidiaries. |
| c. | Increased number of opportunities for handling new agrochemicals will be an additional benefit. |
| 4. | Expansion of environment-friendly businesses |
| a. | The new company will increase its contribution to environment-friendly agriculture through promoting natural enemies, and microbiological agrochemical businesses. |
| b. | The new company will develop a substitution for methyl-bromide used as soil fumigator, which may destroy the ozone layer. |
| c. | The new company will promote environment-friendly fertilizer business. |
| d. | The new company will promote environment-friendly systems to protect against noxious insect such as termites. |
| 5. | New business developments and expansions in the life science field |
| a. | The new company will promote their flower and seeds business, as well as plant biology business such as tissue cultivation. |
| b. | It will also promote genetic analysis of livestock business |
About Tomen Corporation (www.tomen.co.jp)
Tomen, which is ranked seventh among Japan's giant trading companies, is listed on the Tokyo, Osaka and Nagoya stock exchanges. With 80 offices around the world, Tomen is also considered by Fortune magazine to be the 145th largest global company in terms of revenue. It maintains a leadership position in its core businesses including power generation, grain, agro-chemicals, telecommunication and textiles. In July 1999, Tomen received its ISO14001 certification, which is the highest level of international standard that specifies the requirements of an environmental management system.
About Nichimen Corporation (www.nichimen.co.jp)
Nichimen, one of Japan's leading trading companies with net sales in the fiscal year ended March 31, 2000, totaling 2.9 trillion yen, is listed on the Tokyo, Osaka, Nagoya and Kyoto stock exchanges. Its core businesses are chemical & plastics, textiles, foodstuffs, construction and lumber businesses.
Fact Sheet
I. Outline of the merged company
| Name of the company: | to be determined |
| Location of the company: | Tokyo, Japan |
| Start of operation: | April 2001 |
| Amount of capital: | to be determined |
| Shareholders: | Tomen Corporation 40 %, Nichimen Corporation 40 %, Tomen's group companies and other strategic partners 20% |
| Board of Directors: | president and other 2 directors from Tomen, 2 directors from Nichimen |
| Number of employees: | Approximately 130 employees (1,400 employees including affiliated companies) |
| Business projection: | Sales target is 150 billion yen and ordinary profit target is 17 billion yen due to its expected synergistic effects of the merger. |
II. Business organizations and business fields to be merged
Tomen Corporation
| Organizations: | Specialty & Inorganic Chemicals Division / Agro Ecology Department |
| Business fields: | Agrochemicals (chemical and biological pesticides, natural enemies), pharmaceuticals and veterinary medicines |
| Affiliates: | 19 companies including Tomen Agro Inc., Hokko do Brasil, Tomen Agro Mexicana |
Nichimen Corporation | Organization: | Fine Chemicals Division / Crop Protection Chemicals Department and Fine Chemicals Department (except Inflator Unit) |
| Business fields: | Agrochemicals (chemical and biological pesticides), pharmaceuticals and veterinary medicines |
| Affiliates: | 26 companies including Nichimen AgriMart Corporation, Calliope S.A., Nichimen Agro Asia Pte.Ltd. |
Life science business projections of the two companies
Fiscal year ending March 31, 2001 (billion yen, consolidated basis)
| Tomen | Net sales | 47.0 |
| Ordinary profit | 5.8 |
| Nichimen | Net sales | 48.0 |
| Ordinary profit | 2.2 |
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