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Mergers Move Ahead

(3 November - Cropchoice News) -- Two major seed and chemical companies moved to the brink of extinction (by merger) this week. Mycogen, a Dow subsidiary, closed its deal to takeover Cargill Seeds. Also, the US government gave its approval for the merger of the agbiotech divisions of Novartis and AstraZeneca into the "new" seed giant Syngenta.

While producers are losing choices, the Cargill sale is the end of a long and painful road for the company. Minneapolis-based Cargill has been trying to close a deal to unload its seed operation for years; but was held up by disputes with Pioneer Hi-Bred over germplasm. Those disputes were settled in May of this year when Cargill paid Pioneer $100 million and admitted it misused Pioneer's corn lines. The price Dow is reported to have paid, around $300 million dollars, is $200 million less than Cargill first wanted. Together with Dow's Mycogen seed business, the merged company will control 8-10% of the US seed market.

The Dow-Cargill seeds merger isn't the only deal on the front burner. Late Wednesday, Washington regulators approved the merger of the ag divisions of Novartis and AstraZeneca. The "new" company, Syngenta, will be jointly owned by shareholders in its two parents and have around $8 billion in annual sales. According to estimates, Syngenta will control close to a quarter of the entire global market for crop protection chemicals.

By merging and separating their agricultural biotech business, AstraZeneca and Novartis are pursuing a strategy similar to Pharmacia, which recently started spinning off Monsanto. The idea is to reduce the exposure of bigger "life science" companies (many make pharmaceuticals, industrial chemicals, food products, etc..) to the and uncertain agbiotech sector.

Source: Progressive Farmer, Dow, Reuters