Merger creates new agchem leader
Merger creates new agchem leader
MOVES by Novartis and Astra-Zeneca to create the worlds biggest agrochemical company mark the start of a big restructuring in the sector, say analysts.
The recent decision by both companies to spin off their agrochemical arms and merge them has been sparked by a major downturn in global agriculture, and leaves both parents to concentrate on higher margin drugs businesses.
New company Syngenta will be worth about US$15bn (£9bn). Global agchem sales, based on 1998 figures, will mount to $6.9bn, putting it firmly at the top of the global sales league. A further $1bn will be generated by Novartiss seeds business, included in the deal. "Zeneca Agrochemicals and Novartis Agribusiness are an ideal fit with complementary product portfolios and a strong international sales and marketing culture," said Michael Pragnell, Syngentas chief executive designate.
The European headquarters of the new company will be in the UK, and the research station at Jealotts Hill will remain.
UK growers are unlikely to be affected, says analyst Stephen Hearn of Produce Studies. "I cant imagine farmers will see much change. But there might be some reshuffling at distributor level."
He expects to hear similar announcements from other firms soon. "There obviously will be other mergers. I expect we shall hear of more in the next month. The industry is contracting for the first time in a long time, and companies are having to look seriously at cost reductions." Both firms hope to save $525m over the next three years.
Monsanto is seen by many as a potential seller. And Bayer, BASF and DuPont have made no secret of their desire to expand.
The merger would give Syngenta almost a quarter of the world agrochemicals market, so it will need the agreement of competition authorities on both sides of the Atlantic. Assuming that happens, the deal is expected to be finalised in the second half of 2000.
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