Japanese insecticide maker Earth Corp. will acquire a major stake in a new company to be set up by Neumann & Mueller Philippines Inc. to expand into the Southeast Asian country.
Earth said it has signed a deal to buy 66.7 percent of the new company that will engage in sales of pesticide products as well as household and pet care products. The latest acquisition of shares is estimated at several billions of yen.
The deal with Neumann & Mueller shareholders is expected to be completed as early as the end of the year, setting the stage for Earth to move ahead with a plan to purchase an additional stake and fully own the company in about five years.
Earth has opted for the capital connections with Neumann & Mueller, which has served as its local sales agent since last year, rather than go it alone in creating a foothold to capitalize on steadily rising pesticide demand in the Philippines.
As part of the reason for the decision, an Earth official cited the complicated nature of the product authorization process in addition to paperwork steps for registration that could often be burdensome in setting up a new firm.
Tokyo-based Earth expects sales in the Philippines can grow to "several billions of yen" once its business gets on track under the newly signed deal. The official said it may even be possible for Earth to own a plant in the Philippines although it depends on future demand there.
Under the current exclusive distributorship, Neumann & Mueller sells Earth products including Natucair Linen and Fabric Spray, a formula which the firm based in San Juan City claims "has been tested to kill 99.9 percent" of human coronavirus, germs and bacteria.
Now Earth envisions exploring consumer needs by offering products unique to the company, such as the popular Earth No-mat series of liquid-type mosquito repellents, in an effort to cement the foundation of its first full-fledged sales base in the country.
Earth's manufacturing plants in Thailand and Vietnam will likely be main suppliers for imports to the Philippines, the company said.
It added there will not be a disadvantage on the price side against local industry leader S.C. Johnson & Son Inc. of the United States and other rivals given that they also respond to local demand with imports from overseas. (NNA/Kyodo)