Aventis to Sell Off Agriculture Business
(15 November - Cropchoice News) -- Aventis, maker of Starlink, is bailing out of the agricultural biotech business. The move was approved yesterday by Aventis' board, which wants the company to focus on pharmaceuticals. The spin-off, possibly by a stock sale, is to be completed by the end of next year. Another option could be for Aventis to look for another agbiotech company willing to buy the division lock, stock, and barrel.
The sell-off is an embarrassing decision for the company - Aventis had high hopes for Aventis Cropscience, which was created just last December. The soon-to-be-sold division is so new that Aventis' corporate website still refers to it in the future tense. Aventis Cropscience was created in December 1999 after the merger of Rhone Poulenc Agro (France) and AgrEvo (owned by German company Hoechst Schering).
"It's mighty confusing." quipped an ag consolidation watcher contacted by Cropchoice, "A lot of farming customers have no idea who owns the big agbiotech companies anymore. Some of the people working at these merged, demerged, remerged, and spun-off operations are probably so dizzy that they're losing track of who signs their paycheck."
The "new" company, according to Aventis' press release and press reports will take the name "Agreva", a name very close to AgrEvo, the old name of Hoechst Schering's ag division. Major products from Aventis are GMO canola and corn (Libertylink and Starlink), as well as crop protection products that include herbicides (Liberty, Basta, and Balance) and insecticides (Temik and Regent).
Aventis may have to take a financial hit if it tries to sell fast. Initial estimates put its value at about $5 billion. The unit is under a cloud from the Starlink scandal.
Recently, agbiotech spin-off moves at Monsanto, Novartis, and Zeneca have not performed well. Monsanto's stock sale came in at the low end of expectations and suggested a market value for the company well-below what Pharmacia, Monsanto's 90% owner, paid for it. Novartis (maker of NK Seeds) and Zeneca just completed a spinoff of their agbiotech divisions in a new company called Syngenta. At the close of trading on its first day, Syngenta was below its initial offering price. Managers of big mutual funds reportedly are eager to sell the stock.
SOURCE: Aventis, Reuters