By Choi Sung-jin
LG Chem has taken over Dongbu Farm Hannong, Korea’s largest processor of agricultural materials such as seeds and fertilizers, jumping into the agricultural chemistry business, company officials said Friday.
An extraordinary shareholders’ meeting of the company approved the acquisition deal, in which LG Chem acquires 100 percent of Dongbu Farm Hannong’s equity for 515.2 billion won ($429.3 million), they reported. The two sides will formally sign a contract in March in due procedure.
LG Chem, which has expanded its business from basic materials (petrochemical) to information-electronic materials and secondary batteries, will move into agricultural chemistry and will process plant seeds and crop protective materials, a sector that has high growth potential, upgrading its business portfolios and gaining a new growth engine, they report.
Dongbu Farm Hannong is Korea’s largest processor of agricultural materials, taking the largest share of 27 percent in the crop protectant market and the second-largest share of 19 percent in the seed-fertilizer market.
“Global chemical companies have focused on the agro-chemical business as their future flagship sector, and LG Chem has completed preparations to be reborn as an advanced global chemical processor by its acquisition of Dongbu Farm Hannong,” said Park Jin-soo, vice chairman of LG Chem. “Based on our business know-how accumulated over the past half century, we will develop the company into one of the global top-10 processors.”
Agricultural chemistry is emerging as a core industry that will help solve the world’s food shortage with its global market expected to expand from $100 billion in 2010 to more than $140 billion in 2020, growing 6 percent a year. The top-six agricultural companies in the world generate high operating profits of about 15 percent from the agricultural chemistry business, industry analysts say.