2015 Annual Review- M&A activities Covering More Groups, Business Divestment Bringing New Opportunities

M&A activities Covering More Groups

In 2015, global agrochemical sales dropped 8.5%, which was the largest drop over the last 20 years, causing global agrochemical industry to come down to an “ice point”. Under such background, a merging upsurge took place in an attempt to resist the harsh winter market. Since the mergers and acquisitions launched by the second-tier agrochemical enterprises like FMC, PSP and ADAMA in 2014, mergers and acquisitions in 2015 spread to the 6 first-tier agrochemical giants. In December 2015, DuPont and Dow announced a merger, which will be split into 3 companies; the bid from ChemChina and Monsanto for Syngenta is still under the way, which indicates the occurrence of more and more intensified merging activities between large agrochemical companies. For the details see the table 2.

Downstream distributors could not escape from the unfavorable market situation. For example, the pesticide sales of US distributors dropped 3.5% due to the price fall of farm product, farmer’s financing stress and reduced corn cultivation area. To look for business growth, the US agrochemical distributors including Winfield initiated merging activities to acquire retailers for the purpose of consolidation of pesticide and seed businesses.

As an agrochemical service provider, CRO experienced a series of merging and restructuring. In June 2015, HLS and Harlan Lab announced a merger. The new company was named Envigo, which achieved nearly sales of $500 million after the merger, having become the largest crop protection and chemicals research firm, 2nd largest research model and service provider and the 3rd largest preclinical pharmaceutical developer. The rest of CRO companies like Eurofins, Staphyt, SynTech and Mérieux NutriSciences also launched various acquisitions. These acquisitions have promoted the upgrading of the industry research, development and service.

Looking back at the mergers and acquisitions over the last 2 years, it is a manifest destiny that “the stronger lives and the weaker die.” With the industry resources being highly centralized, superior ones will eliminate the inferior ones and the market is expected to be further centralized. After being merged, the technical advantage and scale of economy of merged companies become evident. While the industry is going through the wave of mergers and acquisitions, the survival of small and medium-sized enterprises might become a serious concern.

Business Divestment Bringing New Opportunities

At the time of acquisitions, industry consolidation becomes a trend, which aims to restructure the principal business while divesting the underperforming business so as to focus on the company’s primary business toward higher profitability.

In 2015, Dow AgroSciences was the most active one in split of its businesses. Within just 1 year, Dow AgroSciences divested its post-harvest specialty chemical business AgroFresh, the fumigant Vikane and Profume as well as part of the herbicide business and assets. The company said that an amount of $7 – 8.5 billion income will be generated up to mid-2016 from the divestment businesses. DuPont also said: “To divest some businesses is part of our growth plan which allows us to concentrate on new products to drive our present and long-term profitability.” For the details see the table 3.

After the acquisition of Cheminova, FMC managed to restructure its business operation in Brazil to speed up the business consolidation of Cheminova, particularly the reconfiguration of the product mix of the company such that stress is laid on high-profit and differentiated product while stripping away less profitable product, i.e. to sell the Brazilian generic business Consagro Agroquimica to Albaugh.

In August 2015, after refusal to Monsanto’s offer for acquisition, Syngenta announced a plan to sell its flower and vegetable seed divisions, as well as its Dutch Enkhuizen business unit so as to focus on the principal business.

For the acquiring party of the above businesses or assets, it would mean something different. Because of the different market positioning, for them the acquired businesses may just conform to the objectives of future growth. For example, Albaugh’s acquisition of FMC’s Brazilian subsidiary Consagro enabled a replenished product combination for the company, which helped to speed up Albaugh’s business development in Brazil; Regarding Gowan’s acquisition of the dinitraniline (DNA) herbicide assets of Dow AgroSciences, Juli Jessen, Gowan Group CEO, remarked, “we are enthusiastic to be able to acquire these proven products in this critical era for herbicide resistance management. The products are particularly significant for us in Canada and Europe where our growing sales force is centered on extending the utility of herbicide programs. And we are grateful for the opportunity to defend and evolve the DNAs for niches that have long been our sweet spot, such as vegetables and turf. This move is part of Gowan’s continued efforts to deliver solid chemistry to help solve our customers’ needs.”

With the further proceeding of merger and acquisition in the global agrochemical industry, the divestment of non-primary business and cross-operational business will become a subject of industry consolidation, which will provide some of the enterprises with new opportunities of development and expansion.




This article will be published in the magazine of 2015 Annual Review. If you want to know more themes and details, please click  the following picture:


Focus of this issue:
•    Exclusive interview of leading companies
•    Analysis of Industry Trends
•    Agro-Company Activities in 2015
•    Overview of registered and launched products in 2015
•    Analysis of Global Agricultural Biotech Industry in 2015
•    In Focus
       - Japan Agrochem Firms
       - Biopesticide
       - Biostimulant