Acquisition of Cheminova Opens New Era for FMC

AgroPages has recently had a dialogue with Ms. Bethwyn Todd, Vice President, Agricultural Solutions, Asia and President of FMC Asia. Ms. Bethwyn Todd shared her viewpoints on the acquisition of Cheminova, FMC's plan for future development, the reasons behind the rapid growth, as well as the investment plans in Brazil and China.

In September 2014, FMC announced to acquire Cheminova for $1.8 billion. What is the strategy behind this acquisition? What position do you think FMC will be in the agrochemical market after this acquisition? What core competencies and market advantages will FMC obtain? What do you think of the latest round of M&A booms of agchem industry in 2014?

The integration of Cheminova, along with the planned divestiture of FMC’s Alkali Chemicals business, is part of FMC’s strategy to become a more focused, global agriculture, health and nutrition company with a portfolio that concentrates on high-growth markets. Following the acquisition and divestiture, FMC Agricultural Solutions will account for more than 75 percent of FMC’s revenue as compared to less than 40 percent in 2009.

When the acquisition is complete,FMC Agricultural Solutions will have broader global access to Europe, Latin America and key Asian markets such as India and Australia. Cheminova brings complementary technologies in insecticides and herbicides, significantly expands FMC’s fungicide portfolio, and adds a growing micronutrient business.

The combined company will have stronger formulation capabilities and a broader innovation pipeline of differentiated products.Based on revenue, the combined FMC and Cheminova agricultural business will become the seventh largest agrochemical company. The new FMC Agricultural Solutions will provide customers with a broader set of products, solutions and services; a deeper innovation pipeline of differentiated products; and a broader global footprint.

We believe this is a new period of consolidation in the agrochemical industry with the potential for even more M&A activity. Our pending acquisition of Cheminova – and many of the other recent industry acquisitions – is driven by the need to create global scale, broader technology and crop portfolios, and manufacturing efficiencies. Successful agrochemical companies need a strong technology base and the combination of FMC and Cheminova gives us critical mass in technology development. The combined research and development spending of both companies was over $200 million in 2013.


How do you think the company’s sustainable growth over the past few years? How would FMC maintain such significant increase rate in the future?

These years were certainly exceptional for FMC as many market and operational factors came together in our favor. We achieved stellar growth over the past several years through the development of new products and applications of technology, our crop and geographic focus, and our low-cost, variable manufacturing model.

Through the acquisition of Cheminova, we expect to continue to grow at a higher rate than the industry due to enhanced access to key geographic regions and crop markets, and by offering a larger product portfolio. Together, both companies will have more than 150 active ingredients, 1,500 combined formulations and nearly 4,700 registrations around the world. We will also have six new active ingredients in our development pipeline.

It has become a trend for agchem companies to acquire biotech companies recently, is there any future plan for FMC to step into biotech field through acquisition?

We believe biotechnology, synthetic chemistries and biological solutions are complementary to each other in providingthe best pest control solutions. FMC does not plan to directly invest in biotechnology.

Our focus will be on continued development of synthetic chemistries, biological solutions and micronutrients. In 2013, we created a global alliance with Chr. Hansen to build a world-class biological crop protection platform. Chr. Hansen provides scale up and fermentation manufacturing while FMC supplies formulation, registration and product development expertise and global market access. FMC also acquired the Center for Agricultural and Environmental Biosolutions, creating a proprietary discovery and development platform for biological products. This alliance has deep expertise in scouting and screening for promising new biological technologies.

Brazil and China are two representatives of emerging agrochemical markets and have enormous market potentials. What are FMC's future plans and expectations in Brazil market? What is your vision for China agrochemical market? How would FMC plan the development in China market and what is your expectation?

Over the past six years, Brazilian agribusiness has experienced unprecedented prosperity driven by increased acreage and use of technology. Higher crop yields coupled with improved commodity prices have resulted in greater profitability for growers and the production supply chain.

Today, Brazil is one of FMC’s main agricultural markets. We will continue to invest in the acquisition of new molecules as we expand our research capabilities for the development of new formulations and biological products. We plan to increase our presence and product offerings in grains, cotton, sugarcane, coffee, citrus, vegetables, and forestry markets, especially with the addition of the Cheminova portfolio.

The Chinese agrochemical market is currently in transformation to improve economies of scale and sustainability with the development of family farms, industry consolidation and environmental programs. FMC is well positioned with the right technologies and on-the-ground capabilities to service this market.Through the last decade, FMC has built a strong herbicide portfolio for rice and wheat in China, two of the largest and most strategic market segments, and is proactively developing technologies to address weed resistance issues. We are also progressing rapidly into the fruit and vegetable markets with an evolving fungicide product line and biological technologies. The addition of advanced plant nutrition technologies will allow us to provide a full line of agricultural solutions to growers.

FMC is committed to the Chinese market. We invested in one of the first pesticide formulation joint-ventures in China and are currently doubling that capacity. FMC’s Asia Innovation Center, which opened last July in Shanghai, is equipped with world-class research facilities to develop innovative solutions for our customers in China and around the world. We have a strong on-theground team and we continue to invest in development, marketing, technical service and market access.