The Crop Protection/Seed Industry Update on Mergers
The past few years, the agricultural industry has been undergoing a wave of consolidation, on virtually every level. Dozens of manufacturers, suppliers, wholesalers, and ag retailers have determined the only way to move forward in the current down cycle is by combining their resources.
At the recent Mid America CropLife Association (MACA) meeting in Kansas City, MO, representatives from three crop protection/seed companies involved in the consolidation trend were on hand to share their stories with attendees. First to speak was Judd O’Connor, North American Lead for DowDuPont, whose merger was just finalized before the MACA event.
“Dow and DuPont stock ceased trading on August 31 and on September 1, the new DowDuPont started trading,” said O’Connor in his talk on September 7. “So we’ve only been at this now for less than a week, although it took the companies 18 months of planning to get to this point.”
As a combined company, he added, DowDuPont now has a market presence across more than 130 countries and in almost every major crop. “From a research standpoint, we will be able to bring global a germplasm base to those businesses that wasn’t available in the past,” said O’Connor.
Now that DowDuPont has joined, O’Connor said the overriding plan was to begin splitting the company into three separate divisions, with one of these devoted entirely to agriculture. Over the next 12 to 18 months, these divisions will begin working more independently from one another with the ultimate goal to split each of them off into three independent companies.
“Then what is now DowDuPont agriculture will be a pure play agricultural company,” he said. “This new company doesn’t have a name just yet, but that’s something we will be working on over the next four to six months.”
Next up was Vern Hawkins, Regional Director, North America Crop Protection for Syngenta. In terms of actual mergers, Syngenta’s took place much sooner than DowDuPont’s, with ChemChina completing its purchase of the company back in June. “This took Syngenta from a publicly traded company to a privately-held one, which was basically the only real change,” said Hawkins.
In terms of market standing, Hawkins said that the new Syngenta is the world leader in crop protection products and seed care. At present, the company is the No. 3 producer of seed, but hopes to strengthen this position in the coming years.
“Syngenta wants to be much stronger in the seed area than it is today,” said Hawkins. “So our company is planning to invest more in this segment for the upcoming 2018 season and beyond.”
Within its new “home” market, China, Syngenta will be a major player, added Hawkins – at least depending upon your definition of the word “major.” “Syngenta, in the branded chemicals space, is the market leader in China with a market share of 6%,” he said. “Obviously, that tells you just how fragmented the Chinese market is when it comes to this industry.”
The final speaker during this session was Amy O’Shea, Vice President and Business Director for FMC Agricultural Solutions. Although not directly involved in a merger itself, FMC nonetheless benefitted from the wave of consolidation currently going on in the supplier marketplace.
“In March, FMC was able to announce that it had agreed to acquire a significant portion of DuPont’s products, along with research and development and manufacturing assets, for that company to satisfy regulatory concerns about its merger with Dow,” said O’Shea. “Basically, we were in the right place at the right time to make this happen.”
In all, this acquisition gives FMC access to 15 synthetic molecules and 1.8 million compounds that could lead to future product development. This includes 12 active ingredients currently in development for 60 different crops plus numerous biological products.
“At the end of the day, the landscape changes for us,” said O’Shea. “With these acquisitions, FMC now has moved from No. 8 among crop protection product suppliers to No. 5, with our sales increasing from $2 billion to $4 billion.”