Looking deeper: Bioceres, MBI cooperation, a $300 million Ag Bio leader

On March 16, 2022, Bioceres Crop Solutions Corp., (Bioceres), an Argentina-based biotechnology provider, and Marrone Bio Innovations (MBI), a US-based manufacturer of innovative biological products, announced they had reached a definitive agreement to combine their two companies in an all-stock transactions. The news, published by AgroPages, has generated enormous interest and comments within the industry.

The cooperation between the two companies will create a global leader in agricultural biological formulations, with expected revenues of $300 million. With 90% of companies in this segment having an annual revenue of under $10 million, what are the backgrounds of the two companies and what makes them highly favored by the capital market? AgroPages will present a brief review and comment on the timelines and product mix of the two companies.

About Bioceres and MBI

Bioceres, which originated from a leading growers’ group in Argentina, was formally established in 2001 and is today an international company that sells its agri-inputs in over 38 countries, mainly in Argentina, Brazil, the US, Europe and South Africa. The company stands out with its unique HB4 technology, which is currently the only drought-resistant soybean and wheat breeding technology in the world. In 2016, Bioceres acquired a 50.01% stake in Argentina’s Rizobacter, a global leader in soybean seed inoculants, with some 20% market share in the sector. In 2019, Bioceres integrated an 80% stake in Rizonbacter and became listed in the US.

Argentina-based Rizobacter was established in 1977 and is now a global leader in soybean seed inoculants, with a market share of around 20%, revenues of over US$90 million, and sales in more than 30 countries, based on data disclosed in 2016. The company’s global market share for soybean inoculants reached 23% by the end of 2021. Rizobacter specializes in biologicals and its portfolio includes legume inoculants, biostimulants and biocontrol products. The company has created a proven platform of biological and chemical solutions for crop nutrition and protection, which is uniquely complementary to the seed biotechnology of Bioceres. Despite the agricultural downturns and significant macro headwinds in Argentina, the acquisition has enabled Bioceres to more than quadruple its compound annual growth rate (EBITDA) over a period of 5.5 years.

Founded in 2006, MBI leads the development of environmentally-sustainable agricultural practices, with a portfolio of 18 innovative biological products in the areas of crop protection, crop health and crop nutrition. MBI sells its commercial products globally and works with nearly 25 distributors in more than 20 markets worldwide, including major multinationals, such as Syngenta, Corteva, UPL, FMC, and Nufarm, as well as its North American partners, such as Albaugh, Nutrien Ag Solutions, Helena and Wilbur-Ellis, and other international partners, such as Anasac and Agrimatco. Its end market covers row crops, fruits and vegetables, trees, nuts and vines, as well as greenhouse production. MBI develops and uses proprietary technologies to isolate and screen naturally occurring microorganisms and plant extracts, to create new and environmentally sound agricultural solutions. The company currently has 18,000 microorganisms and over 500 granted and pending patents.

Complementary products and markets for Bioceres and MBI

The introduction of MBI’s expertise in biological insecticides, nematicides and biological herbicides will fill the gap in the portfolio of Bioceres. The two companies earned more than $10 million from their microbial product portfolios, which cover most applications, such as foliar spraying, seed treatment and soil application. As the core seed business of Bioceres requires a full range of seed-based products, the cooperation will enhance their joint seed treatment product portfolio, including inoculants, biostimulants, bio-insecticides, bio-nematicides and bio-fungicides, to a near perfect level. As for crop types, Bioceres is more oriented towards field row crops, while MBI is more focused on cash crops, so they can complement each other in this regard.

The future research and development of the two companies will combine MBI’s microorganism innovations with a series of trials on genetic seeds by Bioceres, to develop more seed traits with combined resistance. Their research in microorganisms, micro-bead fertilizers and adjuvants will also jointly improve the effectiveness of their formulations to respond to climate changes, such as drought, as well as to help achieve carbon neutrality in agriculture, as advocated in recent years.

MBI is based in the US, which accounts for about 77% of its revenue, and its sales team covers all major regions of the country, including California and the Pacific Northwest, Southeast, Northeast, Mid-Atlantic and the Great Lakes, focusing on high-value cash crops, such as fruits, nuts and vegetables. MBI sells products through several major national distributors in North America, such as Albaugh, Aligned Ag, Helena Chemical, Nutrien Ag, Simplot and Wilbur Ellis. Outside the US, Syngenta is responsible for specialty crops in Europe, while FMC targets certain markets in Latin America for MBI. Its business footprint in North America and Europe will strongly complement the current efforts of Bioceres in these regions, while the leadership of Bioceres in Latin America will also provide an excellent channel for the portfolio of MBI in these important row crop markets.

Summary

In summary, the cooperation of Bioceres and MBI is a highly complementary move that will maintain their respective share in the cash crop market in economically developed countries/regions, while their strategic focus will be slightly shifted to the seed treatment of row crops, as well as closely monitor hot spots and adapting to global trends by offering a full range of biological solutions.

Most agricultural biological formulation companies are established on a characteristic product and focus on niche markets. However, the acquisitions, mergers and integrations of the past two years reveal that companies that focused on a single product tend to cooperate with the same type of companies, but with different products. Creating a full range of product lines has become highly valued in the capital market.

Furthermore, the tense geopolitics and global food security issues have also accelerated investment in the product research of agri-inputs companies in the field of seed treatment, which will be a future area of growth of the biological market.

AgroPages will continue focusing on investment and innovation projects. If you have any comments or information, or you are looking for potential opportunities in the agricultural biological industry, please contact the author.

Yutian Lu

yutian.lu@agropages.com