Syngenta to Acquire Seed Business in Germany and Poland

Zacks Equity Research
June 17, 2014

Agricultural chemicals company Syngenta AG (SYT) recently announced that it has entered into an agreement to acquire the German and Polish winter wheat and winter oilseed rape (:WOSR) breeding and business operations from Sweden-based Lantmännen.

Following the acquisition, Syngenta will have access to high-quality germplasm, a seeds pipeline and its commercial varieties.  It will enable the company to retain a greater foothold in the production of the two crops, which have strong growth potential. All employees of Lantmännen will continue to work for Syngenta in Germany and Poland.

Along with the acquisition, Syngenta and Lantmännen also entered into a research and development agreement related to wheat. Further, Lantmännen will distribute Syngenta’s cereals and WOSR seeds in Sweden.

Financial details of the transaction were not disclosed. The deal, subject to regulatory approvals from the German competition authority, is expected to close next month.

Syngenta reported record sales across most of its segments in the first quarter of 2014. Revenues in EAME increased 8% year over year, while rising 5% in Latin America. Asia Pacific also recorded a 6% year-over-year sales hike. In spite of the sales decline in North American regions owing to delayed plantings, growth in European markets led to an overall rise in revenues. Moreover, Syngenta is expected to announce its half-year 2014 results on Jul 23, 2014. Acquisitions like this are anticipated to fetch greater revenues in the coming quarters.

Syngenta is involved in the manufacturing, marketing and research of seeds and pesticides, enhancing crop yields and food quality. With a market capitalization of $34.3 billion, Syngenta has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Gruma S.A.B. de CV (GMK), Limoneira Company (LMNR) and Wilmar International Limited (WLMIY). All these stocks carry a Zacks Rank #2 (Buy).

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