The company, which is being bought by China National Chemical Corp., is said to have put in a bid for Bayer’s LibertyLink assets
Syngenta is leaving the canola business but could soon be coming back in a big way.
“We made a decision to exit the canola seed market,” said Chris Davison, head of corporate affairs Canada for Syngenta.
“That is a business decision based on consideration of a number of factors related to the current canola seed market in Canada.”
The company will continue to service its canola portfolio this year.
Davison would not provide any further detail on what was behind the decision to stop promoting and selling the company’s six canola hybrids.
“There are multiple factors involved for sure,” he said.
“We look at that holistically, where the market is today and where it may be going in the future.”
The company’s foray into the canola market was short-lived. It launched its first hybrid in Western Canada in 2013.
However, there are rumours that Syngenta, which is in the process of being acquired by the China National Chemical Corp., may soon be re-entering the canola market as the dominant seed provider.
According to a Bloomberg story, Syngenta and BASF have submitted preliminary bids for Bayer’s LibertyLink assets. Bayer has agreed to divest itself of those assets to appease regulators in its attempt to acquire Monsanto.
Bayer’s canola, cotton, LibertyLink and Liberty herbicide assets would fetch US$2.5 to $3 billion, according to the story. LibertyLink is the top selling canola system in Canada.
Davison would not comment on the rumour, but he did say the company’s decision to exit the canola business in Canada was not linked to the sale of Bayer’s LibertyLink assets.
Christian Faitz, an investment analyst with Kepler Cheuvreux who follows agricultural seed and chemical companies, has felt for a long time that BASF would be the logical buyer of Bayer’s assets.
In an investment research note he wrote a year ago, Faitz said BASF is the only one of the big-six companies not involved in a merger or takeover.
“We believe BASF has done the right thing so far,” he wrote.
Faitz accurately predicted that Bayer would have to jettison its LibertyLink franchise and speculated that with everybody else busy integrating companies, BASF would be one of the only buyers with a balance sheet capable of acquiring the assets he valued at $5.3 billion at the time.
“Since all other market participants will either be busy with their own deals or too small and with a different focus, BASF is likely to be one of the only bidders around,” he wrote.
“Hence, an extremely attractive seed platform would fall into its hands at decent multiples.”
BASF has no seed business other than a joint venture with Monsanto on DroughtGuard products, which are mostly corn varieties.
Faitz believed at the time that Dow may also be forced to get rid of its seed business worth $7.5 billion, but so far regulators have asked the company to sell only its Finesse and Rynaxypyr pesticides.
He said BASF could suddenly become a major player in the seed business without much effort.
“Competitors might be begging the company to take assets so they can fulfill regulatory requirements,” Faitz wrote.
Kevin Hursh, an agricultural commentator, thinks western Canadian growers would be happy with either Syngenta or BASF buying Bayer’s LibertyLink assets.
“They are reputable companies that have a long history in Western Canada,” he said.
“Even though they haven’t been strong on the seed end of things, they have a strong network and base and name recognition and I anticipate producers would be very comfortable with them owning those assets.”
Greg Sears, chair of the Alberta Canola Producers Commission, said the biggest thing growers want is diversity of supply and traits. He is pleased to hear that two well-financed companies are in the running for the LibertyLink assets.
“It’s good to have significant players that have the stability to provide funding support for development of new agronomic traits,” he said.