Daily Management Review

Crop Price Pressure Reason Behind Reported Talks of Deal Between DuPont, Syngenta


11/06/2015




In an effort to setting up what would be the industry's first big shake-up in at least a decade, some of the world's largest agricultural companies are in talks to combine business.
 
The agricultural companies are battered by three years of withering crop prices and pilling losses.
 
The Wall Street Journal reported that Syngenta AG is discussing with DuPont Co. a potential combination with DuPont's agriculture division.
 
Another source knowledgeable about the matter said that Dow Chemical Co. which is exploring a sale of its seed and pesticide unit, is also the target of DuPont and the company is separately discussing the matter separately with Dow.
 
The sources said that the talks are in the early stages of discussion.
 
Monsanto Co. in August abandoned its effort to acquire Syngenta for as much as $46 billion after being rebuffed by the Swiss company and this has created a flutter among the industry by reports of the talks between the companies.
 
Analysts said that the Monsanto deal would have created the world's largest supplier of seeds and pesticides, but Monsanto now could face the threat of much-enlarged competitors if its rivals end up combining and it strikes no combination of its own.
 
Without being specific, executives have publicly signaled their interest in consolidating. The fact that DuPont has been discussing deals with his counterparts was confirmed by Edward Breen, who became DuPont's interim chief executive on Oct. 16 following the departure of Ellen Kullman.
 
"Everyone is talking to everyone," said Dow Chemical CEO Andrew Liveris on a conference call last month, when his company announced it is exploring deal possibilities for its agriculture division.
  
Pressuring profits in the global market for genetically modified seeds and chemicals to kill weeds and insects, the U.S. farm income is on pace to hit its lowest level in nearly a decade.
 
Along with mounting consumer scrutiny of crop chemicals and biotech seeds, the manufacturers also face growing challenges from pests developing resistance to commonly used products.
 
"The natural evolution is to get together, cut costs, combine R&D efforts and get scale. If one [merger] happens, more than one will happen," said Ari Gendason, senior vice president of corporate investments for Continental Grain Co., an agriculture-focused holding company that has owned seed-company stocks.
 
There has been increasing pressure from investors to improve returns and the recent deal talks follow that mounting pressure.
 
Activist hedge fund Third Point LLC at Dow Chemical along with Trian Fund Management LP has pushed for change at DuPont. And some of Syngenta's shareholders in October formed a group to complain after the company spurned Monsanto's advances.
  
While reviewing its other seed businesses, Syngenta, whose CEO abruptly resigned last month, has said it is selling its vegetable- and flower-seeds businesses.
 
The global seed and pesticide business is dominated by "big six" group of companies which was formed after a series of multibillion-dollar deals around the start of last decade and included Bayer AG and BASF SE.
 
The last major M&A activity in the industry occurred in 2007 when Monsanto acquired top U.S. cottonseed developer Delta & Pine Land Co. for $1.5 billion, according to data compiled by Dealogic.
 
The last three years have seen straight years of bumper crops and have swelled grain bins around the world and pressured grain and oilseed prices.
 
(Source:www.marketwatch.com & www.nasdaq.com) 






Science & Technology

NASA’s Mars Mission To Make Use Of Cold War-Era Atomic Rockets

Israel Completes Mars Habitat Simulation Experiment

Just $24 Earned By Hackers From The Huge Cryptojacking Campaign Conducted Last Week

New Molecule That Quickly Fights Cancer Cells Identified By Swedish Scientists

The U.K.’s Health Sector To Integrate Israeli ‘Digital Health’ Technology

Cryptocurrency Mining Malware Infects Government Websites In Multiple Countries All Across The World

New Research Into Space Settlement And Space Habitation Will Be Supported By Seed Grants Launched By UAE

NASA Confirms Mystery Satellite To Be Its IMAGE Satellite

Facebook To Put A Ban On Cryptocurrencies Ads

Study Show An Early Sign For Alzheimer's Is Sleep Disruption

World Politics

World & Politics

Australia To Welcome Britain On The Latter’s Interest In Joining TPP

South African President Zuma Finally Resigns, New President To Be Elected Soon

13 countries with the best healthcare system

France is coming closer to Iran

India-Russia Develops Supersonic Missile Which Could Raise Concerns In China

Yet another serious political risk for Europe: Italian elections coming soon

Seven Weeks Time Period , Says Theresa May, For Agreement On Brexit Transition Deal

Germany on the brink of political chaos