FMC Corporation Announces Acquisition of Significant Portion of DuPont’s Crop Protection Business; Simultaneous Sale of Health and Nutrition to DuPont

FMC Corporation (NYSE: FMC) and DuPont (NYSE: DD)  announced the signing of a definitive agreement for FMC to acquire the portion of DuPont's Crop Protection business it must divest to comply with the European Commission ruling related to its merger with The Dow Chemical Company.  Additionally, DuPont will acquire FMC Health and Nutrition and receive $1.2 billion in cash.  FMC will acquire DuPont's global chewing pest insecticide portfolio, its global cereal broadleaf herbicides, and a substantial portion of DuPont's global crop protection R&D capabilities.  In 2017, FMC expects this acquired business will generate approximately $1.5 billion in revenue and $475 million of EBITDA.

After closing of the acquisition, FMC Agricultural Solutions will become the fifth largest crop protection chemical company in the world by revenue, with estimated annual revenue of approximately $3.8 billion. 

The Crop Protection Business Being Acquired

The acquired portion of DuPont's crop protection business includes an industry-leading selective insecticide portfolio consisting of Rynaxypyr^®, Cyazypyr^® and Indoxacarb.  The first two of these products have full patent protection over their respective active ingredients, and FMC expects these products will generate over $1 billion in 2017 revenue.  These selective insecticides are highly complementary to FMC's existing broad spectrum insecticide portfolio. 

The acquired portfolio also includes DuPont's global cereal broadleaf herbicides, consisting of nine active ingredients and multiple formulated products.  This herbicide portfolio comes with strong, recognized brands and DuPont's proprietary PrecisionPac^® technology.  These products bring significant diversification to FMC's crop exposure in herbicides, as well as increasing the balance of pre-emergent and post-emergent applications in FMC's portfolio.

The geographic spread of the revenue in this portfolio will result in a significant increase in FMC's presence in Asia and Europe.  Following the acquisition, FMC's crop protection revenue will be almost equally spread across all four major regions – North America, Latin America, Europe and Asia.

The underlying intellectual property related to the acquired products, including patents, registrations and data packages, will be transferred to FMC.  FMC will acquire a global manufacturing network to fully support these products, including four active ingredient manufacturing facilities and 10 regional formulation plants.

The acquisition will bring DuPont's world-class discovery and development organization, including its Delaware crop protection research headquarters, 14 regional development labs and related regulatory capabilities.  This organization includes a pipeline of 15 synthetic active ingredients currently in development, covering insecticides, herbicides and fungicides, and an extensive library of 1.8 million synthetic compounds.  The majority of DuPont's crop protection research workforce will transfer to FMC as part of this transaction.

FMC Health and Nutrition Divestiture

FMC Health and Nutrition will become part of DuPont's Nutrition & Health segment. 

"FMC Health and Nutrition is a highly profitable business with leading positions across the vast majority of its portfolio, deep applications knowledge and an extensive global network of laboratories and manufacturing facilities.  It is a very complementary fit with DuPont's current portfolio.  We are confident it will thrive under DuPont's leadership and will contribute to their successful Nutrition & Health business," said Brondeau.

Additional Information

The transaction is subject to the closing of the Dow and DuPont merger, as well as customary closing conditions and regulatory approvals.  Closing is expected to occur in the fourth quarter of 2017.  FMC expects this transaction to be immediately accretive to adjusted earnings per share, and will give updated guidance for 2017 at its earnings call scheduled for May 2, 2017.  

Dyal Co. LLC and Citi acted as financial advisors and Wachtell, Lipton, Rosen & Katz acted as legal counsel to FMC.  Citi provided financing advice and committed debt facilities.

source : FMC website

Bayer and Monsanto to Create a Global Leader in Agriculture

In the largest deal of 2016 (so far), after months of negotiations  with several  baby steps  agriculture giants Bayer and Monsanto announced  that  they are planning to merge. In an  all-cash   transaction    Bayer  striking the deal a $128  a share  valuing Monsanto at $66B.  including the debt.

Consolidation has been driven by a global  glut that has pushed down crop prices and hurt farm incomes, leading to reduced investment in agricultural inputs such as fertilisers and  Agrochemicals.   Several Mega & small mergers are right now underway/partially completed   like Dow Chemical and DuPont, ChemChina &   Syngenta, FMC & Cheminova  etc.

But the proposed merger  likely face an intense and lengthy regulatory process If the deal closes, it will create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.

Both the   company executives claims the  businesses are complimentary & there is very little overlap between them.  However antitrust experts have said regulators  likely  demand the sale of some soybeans, cotton and canola seed assets.

The transaction includes a $2-billion break-up fee that Bayer will pay to Monsanto should it fail to get regulatory clearance. Bayer expects the deal to close by the end of 2017.

Largest U.S. chemical companies to combine in megamerger. Could spark more deals!!

Two American  Chemical giants and possibly among the oldest,  DuPont and Dow Chemical  have agreed to combine in an all-stock merger valued at $130 billion  which  would be the 18th largest deal ever.

 

Dow Chemical Co. and Dupont Co. that are 118 and 213 years old, respectively, announced the blockbuster, tax free  deal that would take two years to complete.  Following the completion of the deal's in 2016, the  merged entity  would eventually    will  break up  into  3 separate, publicly-traded entities focusing on Agricultural products, Material sciences, and Specialty products.

The deal, the fifth-largest corporate merger of 2015, would certainly receive scrutiny from federal regulators, especially regarding the new companies  place in global agricultural production, including seeds, insecticides, and pesticides. Executives from both companies  however said the agrochemicals businesses have little overlap and any asset sales would likely be minor.

By revenue, the material sciences company – which makes products for the packaging, transportation, and infrastructure industries, to name a few – will be the largest. Its combined revenue in 2014 was around $51B on an adjusted basis. It will compete with the likes of corporate titans BASF, Honeywell, and 3M.

The specialty products company, with a combined revenue of $13B in 2014, would sell materials to the electronics and communications industries, among others.

The agriculture company, focusing on seeds and chemicals, would have a combined adjusted revenue of $19B overtaking BASF as the leader in agrochemicals. In the seed industry, DowDupont is pitted against behemoth Monsanto.

Dow shareholders would own 52 percent of the new company after preferred shares are converted, the companies said. The agreement includes a $1.9 billion termination fee under specified circumstances, such as rejection by shareholders.

The biggest impact will certainly be in the agriculture market, where the seeds and crop chemical industries are to undergo rapid consolidation

Prior to the merger, Dupont said in a statement it will slash $700 million in costs, with ten percent of its workforce "impacted" by the move, while Dow is expected to drop $300 million in costs.

As per Dealogic , this   merger would represent the 18th largest corporate deal of all-time. It would trail the 2015 deals made by Allergan and Pfizer, Anheuser-Busch InBev and SABMiller, BG Group and Royal Dutch Shell and Time Warner Cable and Charter Communications.

Dow and Dupont have a combined annual revenue of around $83 billion, with operating profit of about $15 billion.

Cipla to acquire US generic business

Cipla has acquired two US-based generic drug companies -- InvaGen Pharmaceuticals Inc., and Exelan Pharmaceuticals Inc for a total value of $550 M.

InvaGen & Exelan Pharmaceuticals    owned by the promoter of Hyderabad-based drug maker Hetero Drugs Ltd.  InvaGen acquisition  provides Cipla with an access to large wholesalers/retailers in the US. While, the acquisition of Exelan Pharmaceuticals provides Cipla access to the government and institutional market in the US . The combined revenue  of these  two companies  were approx  $200 M in 2014.  

InvaGen Pharmaceuticals is not linked directly to the flagship companies of Hetero group, Hetero  likely to  continue to strengthen its  US  presence  by investing  in  its subsidiary firm Camber Pharmaceuticals Inc.

Evonik to Acquire Monarch Catalyst of India

Evonik Industries   to strengthen its global catalysts business, has signed an agreement with Monarch Catalyst Pvt. Ltd., India to acquire 100% of the company’s shares. The transaction is expected to close during the first half year of 2015 subjected to  regulatory approvals.

Evonik with its Business Line Catalysts is a global leader in producing specialty catalysts, custom catalysts and catalysts components for the Life Sciences & Fine Chemicals, Industrial & Petrochemical and Polyolefines market segments. This bolt-on acquisition in India with annual sales in the low double-digit million € range complements Evonik’s leading positions in activated base metal catalysts and precious metal catalysts. Monarch’s global oils & fats hydrogenation catalysts business is a broadening of the Evonik catalysts portfolio. Monarch Catalyst has about 300 employees.

Shift to new base year lifts India GDP growth in FY14 to 6.9%

India  revised its  growth rate to  6.9 %  in 2013-14, almost 50 per cent higher than the 4.7 % estimated earlier.  The growth estimate was revised on account of  a  move  to adopt 2011-12 as the base year for computation of national incomes instead of   earlier base 2004-05.

India  has decided to adopt the international practice of presenting industry-wise estimates as ‘Gross value added at basic prices’ (GVA) instead of  GDP at  factor cost. With this move, ‘GDP at market prices’ will be the basis for ascertaining GDP.

The Centre had set a fiscal deficit target of 4.1 per cent of GDP for 2014-15 and achieving this target will not be much of a challenge now since  the GDP computation concept has been changed and also given that global oil prices have plummeted.

These latest numbers are likely to give more elbow room to the Finance Minister in the upcoming Budget and one can expect  spending to go up without the government dithering from its fiscal target.