Denso in talks to buy Temasek-backed seed maker for US$500 million

[TOKYO] Denso is in final talks to buy a Temasek-backed seed supplier for around US$500 million, as the Japanese vehicle parts supplier deepens its expansion into the agriculture sector, sources familiar with the matter said.

Singapore investment firm Temasek, which owns almost half of Axia Vegetable Seeds Group, is set to generate a profit from the sale, the sources said, asking not to be identified because the negotiations are private.

Representatives for Denso and state-owned Temasek declined to comment. Netherlands-based Axia did not immediately respond to a request for comment made outside of normal office hours.

A purchase would align with Denso’s ambition to become a key supplier of industrialised greenhouses capable of producing food in any climate. The company is seeking to generate 20 per cent of its revenue from “new value business” including food and agriculture, it said in 2023. The auto business currently accounts for more than 98 per cent of its revenue, according to data compiled by Bloomberg.

Denso acquired greenhouse maker and horticultural solutions provider Certhon Build BV in 2023, and has been developing robots able to pick fruits and vegetables such as tomatoes. It has said its share of the 700 billion yen (S$6.3 billion) market for greenhouses and adjacent segments is only about 2 per cent, with room to grow.

For Temasek, Axia is the latest in a series of asset sales involving its investees and subsidiaries. Axia also sold its open-fields seeds business to India’s Namdhari Seeds earlier this year.

Olam Group, a Temasek-owned food and agriculture trader, agreed to sell a controlling stake in its agribusiness unit to Saudi Agricultural & Livestock Investment in a US$1.8 billion deal in February. BLOOMBERG