The buzz in the pesticide industry
It's no secret: Pesticide-makers, hurt by the drop in farmers' chemical purchases as commodity prices fall, are weighing merger deals that would combine plants, cut costs, and speed future products.
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It's no secret: Pesticide-makers, hurt by the drop in farmers' chemical purchases as commodity prices fall, are weighing merger deals that would combine plants, cut costs, and speed future products.
"Everybody is talking to everybody" among his fellow CEOs, Pierre R. Brondeau, chief executive of FMC Corp., the Philadelphia-based pesticide, food-preservatives, and lithium-products maker whose 49-story headquarters tower is now rising on the Schuylkill's west bank, told investors Oct. 29 in his fall conference call.
Hear the echo?
"Everyone is talking to everyone," Wilmington-based DuPont Co.'s new chief executive, Edward D. Breen, had told investors two days earlier, descibing his fellow pesticide-maker CEOs in his own quarterly investor confab.
"There is a lot of talk going on in the industry, which will most likely lead to some sort of consolidation," Brondeau affirmed.
"It's like playing chess. Everyone is making a move and waiting. Lots of discussions are taking place."
Last month, FMC was rumored to be talking pesticide deals with DuPont - deals that could have shifted managers from Wilmington to Philadelphia or the other way around, depending on which side ended up running what.
Analysts also reported DuPont in talks with Switzerland-based Syngenta, which refused a $46 billion offer from Monsanto and which on Friday fielded a reported $42 billion offer from ChemChina, driving chemical stocks higher from their recent funk.
Dow Chemical, under pressure from activist investors to boost its own profits, which have sagged since it was forced to buy Philadelphia's former Rohm & Haas at a premium price in the depths of the last recession, has been looking for someone to buy its pesticide lines.
Over the years, FMC has split, bought and sold so many business units, from a distance it looks almost as much like a chemical hedge fund as an operating company.
But Brondeau sought to assure investors he won't overdo FMC's next deal. "The only thing I can tell you for sure is we are not an active buyer of a large company; I don't think it would be reasonable," he said, noting that FMC is still digesting last year's $1.8 billion takeover of Denmark-based Cheminova.
With chemical-makers already concentrated, big corporate deals will be scrutinized under government competition rules, Brondeau noted. Instead of blockbuster acquisitions, FMC sees more practical opportunity in acquiring niche businesses that may "drop" from bigger companies' deals, he added.
On Monday, DuPont took a step toward confounding anyone who sees its new CEO, past boss of much-divided Tyco International Ltd., as strictly a corporate break-up artist and encouraging those who believe Breen when he says he is eager to invest in long-term opportunities that build on DuPont strengths.
DuPont Industrial Biosciences said it had agreed to spend $75 million for Dyadic International Inc.'s enzyme lab in the Netherlands, and for C1, Dyadic's fungus-based enzyme-production technology.
DuPont Biosources boss William F. Feehery said his group, which is developing corn- and other plant-based cleaners, fuels, and fibers, will use Dyadic's technology to develop new animal and human food ingredients.
In a statement, Feehery noted the deal follows Biosources moves, announced this summer, to build a new 30 million-gallon cellulose biorefinery in Iowa, and to license DuPont-controlled enzymes and enzyme-production technology to Jilin Province New Tianlong Industry Co. in China.
DuPont's expansion moves seem to be focused on Europe, Asia, and other development markets, and not on plants in the United States, where the company continues to suffer reversals on product-liability lawsuits and where factory problems in Texas and New Jersey have affected production.
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