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American Vanguard, Monsanto Extend Tie-Up

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Specialty chemicals maker American Vanguard’s (AVD) fully-owned unit Amvac Chemical Corporation has extended its herbicide co-marketing agreement with Monsanto Company (MON).

The companies have extended their multi-year collaboration to jointly market Amvac’s post-emergent corn herbicide Impact as part of the Roundup Ready PLUS weed management platform through August 2017. Monsanto will continue to license its Roundup Ready PLUS trademarks for use on Impact. Financial terms of the deal were undisclosed.

Under the deal, Impact will be co-promoted by American Vanguard and Monsanto as the qualifying post-emergent Roundup agricultural herbicide tank-mix product in the U.S. and will be listed as an endorsed product in the platform. It will be supported by Monsanto’s extensive corn Incentives.

Impact complements Monsanto’s Roundup PowerMAX and Roundup WeatherMAX herbicides by offering improved control of a range of broadleaf weeds. The Roundup Ready PLUS platform is geared to offer corn growers with recommendations of cost-effective and sustainable weed control products and provide financial incentives for using many of these products.

The collaboration offers Amvac with the opportunity to boost sales of its Impact herbicide. Moreover, it offers Monsanto with more effective and comprehensive control for its Roundup herbicides and provides the U.S. corn grower with the opportunity to maximize yield.

American Vanguard makes specialty chemical products for agricultural and commercial applications. The company develops and markets an array of chemicals, including insecticides, fungicides and herbicides, for crops, human and animal health protection. American Vanguard has the largest assortment of corn soil insecticides coupled with the most advanced dispensing equipment.

American Vanguard’s first-quarter 2013 profit nearly doubled on the back of strong market demand for its corn herbicide and insecticide products. It posted a profit of $16.9 million in the reported quarter, a 94% surge from a profit of $8.7 million recorded a year ago.

Revenues shot up 39% year over year to $121.5 million in the reported quarter, buoyed by strong adoption of American Vanguard’s granular soil insecticides and Impact herbicide in the domestic corn market.

American Vanguard is optimistic about 2013 and feels that it is well placed to meet the increasing demand for soil insecticides by maintaining full production of its products and proprietary equipment systems. The company should also benefit from its herbicide collaboration with Monsanto.

American Vanguard currently carries a Zacks Rank #1 (Strong Buy).

Other companies in the specialty chemicals industry with favorable Zacks Rank are OM Group Inc. (OMG) and Ferro Corp. (FOE). Both retains a Zacks Rank #2 (Buy).

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