South Africa finally approves DuPont-Pannar Seed deal

Date:05-29-2012

The South African Competition Appeal Court has approved E I DuPont de Nemours & Co's proposed acquisition of domestic seed company Pannar Seed, more than a year-and-a half after the US chemical giant offered to buy a majority stake in the largest seed company in Africa.

The approval is subject to the companies meeting certain conditions, including long-term investment in South Africa, both firms said in a statement.

In September 2010, DuPont's South African subsidiary Pioneer Hi-Bred had proposed to buy a majority stake in Pannar, a significant competitor in the international seed industry (AgroNews 2010-09-16).

While making its proposal, Des Moines, Iowa-based Pioneer said the partnership would help it develop genetically engineered crops specifically tailored to different regions of Africa.

Pioneer said that the deal would expand its presence in Africa where yields have lagged for crops such as corn. Improved yields there are seen as crucial to feeding a growing world population that is consuming more meat, which requires more grain for feed. Pioneer said the deal would provide farmers "with better products faster than either business could on its own.

With an eye on the approximately 75 million acres (30 million hectares) available for maize production, Pioneer had said, ''Africa represents a significant opportunity for improved productivity. Average grain yields are just one ton per hectare, less than one-third of what is achieved in other developing regions and only one-fifth of yields in developed countries.''

Pioneer intended to make South Africa one of its major research hubs outside the US in addition to existing hubs in Brazil, China and India.

The research hubs were intended to help stimulate a transfer of skills and technology to SA, with benefits to farmers and consumers throughout Africa. The partnership allows Pannar access to Pioneer's plant genetics and advanced breeding technologies.

The South African Competition Commission in December 2010 rejected the deal since there were only three companies in the seed business in South Africa, and the merger would have reduced competition between just two firms, including the merged entity (AgroNews 2010-12-10).

Pioneer and Pannar are the second and third-largest maize seed producers and suppliers in South Africa after Monsanto SA.

Pioneer had appealed the ruling with the South African Competition Appeal Court. The deal had already been approved by regulators in other African countries where approval was required, including Kenya, Malawi, Namibia, Swaziland, Tanzania and Zambia.

Founded in 1958 in Greytown, South Africa, an agricultural community situated in KwaZulu-Natal, on the eastern seaboard of South Africa, Pannar is in the seed business with operations throughout Africa and internationally.

It has its own seed businesses in nine countries in Africa, including South Africa, and sells through established marketing networks into nine other African countries.

In addition to its extensive research infrastructure in Africa, it also conducts research and commercial activities in the US and Argentina and has a genetics licensing business in Europe.

But this is not the first instance, where South Africa had blocked a deal in recent times. It rejected a $24 billion tie-up between India's leading mobile services provider Bharti Airtel with local telecom company MTN Group on the grounds that MTN would lose its South Africa listing.

It also asked WalMart to revise its 100 per cent proposed acquisition of local retail chain Massmart, and the retail giant settled for a controlling stake.