Business Update – It’s takeover and merger season
The last weeks of 2015 and the beginning of 2016 showed an interesting activity with many agribusiness companies acquiring others, merging, taking over assets and establishing joint-ventures. Here’s a recap.
Merial possibly in hands of Boehringer Ingelheim
Mid-December, it was announced that Merial, the animal health division of Sanofi, might become part of Boehringer Ingelheim. The 2 health giants announced that they had entered into negotiations to swap businesses. The proposed transaction would consist of an exchange of Merial with an enterprise value of €11.4 billion and Boehringer Ingelheim consumer healthcare (CHC) business with an enterprise value of €6.7 billion.
Combining the 2 animal health portfolios with focuses on e.g. poultry and swine would make BI the second-largest player worldwide with pro forma sales of about €3.8 billion in 2015. The combined portfolios include anti-parasitics, vaccines and pharmaceutical specialities. Lyon, France, would be a key centre of the new animal health business. The companies indicated to close the potential transaction in the fourth quarter of 2016.
Part of Zoetis assets transfer to Huvepharma
Late December, animal health company Huvepharma, acquired several assets from Zoetis, including products as well as 2 owned and 1 leased US manufacturing sites. The assets associated with this deal involve an international portfolio of medicated feed additives, including Albac and Bio-Cox/ Salinomax as well as Inovocox EM1. Huvepharma will also acquire manufacturing sites in the US, in Laurinburg, NC and Van Buren, AR.
Other new assets include water soluble veterinary products; R-Pen, Oxytet, Sul-Q-Nox, CTC, Lincomycin, Poultry Sulfa and Neo-Sol including the formulation facility located in Longmont, CO. Additional pharmaceuticals assets were also acquired that are predominately sold in Europe and include Lincocin Forte, Stockade, Bacivet, Combiotic and Quadrisol.
DuPont and Dow to combine in merger
Early January 2016 a large chemical merger was announced: DuPont and The Dow Chemical Company announced an all-stock merger of equals. The combined company will be named DowDuPont and had a combined market capitalisation of roughly $130 billion at the announcement. The parties intend to subsequently pursue a separation of DowDuPont into three independent, publicly traded companies. This would occur as soon as feasible, expected to be 18-24 months following the closing of the merger.
One of these companies is envisaged to be a ‘global pure-play agriculture company’, combining the company’s seed and crop protection businesses; combined pro forma revenue for this company is about $19 million. DuPont is particularly well-known in the swine business through its Danisco animal nutrition brand. The company acquired Danisco in 2011.
DLG Group and Lantmännen strengthen cooperation
Also in December: the Danish DLG Group and Swedish Lantmännen announced they are to expand their existing cooperation on agricultural activities in a new 50-50 joint venture Lantmännen DLG International (LDI). The purpose of the new company is to strengthen the position in existing markets and business areas, in which DLG and Lantmännen already have a strong partnership, and to expand into new, primarily European, markets.
The 2 farmer-owned companies, DLG and Lantmännen, are together the absolute elite measured on turn-over and earnings. The new JV will be run jointly by members from the 2 executive management boards and the 2 chairmen.
De Heus buys Spanish-Portuguese feed company
Also in mid-December, Dutch feed company Royal De Heus reported to have taken over the Spanish-Portuguese compound feed company Núter. Previously, Núter was held by a consortium of financial investors. With a volume of 1 million tonnes of compound feed annually, Núter has a leading position on the Spanish-Portuguese open feed market. The acquisition is in line with De Heus’ strategy to grow its international animal feed operations.
With its 500 employees and 12 strategically located production sites, Núter has created a good distribution network. The company offers a complete range of compound feeds for cattle (meat and milk), poultry, pigs, rabbits, sheep and goats. In Portugal, Núter operates under the name Saprogal. Key brands in Spain are Biona and Passaranda.
Fancom and PigTek join forces
An internal merger, also announced mid-December: Farm control specialist Fancom and pig equipment brand PigTek are joining forces as from 2016. PigTek’s Intellitek sow feeding station, the FaroTek individual farrowing sow feeder, and the Rondomat sensor-controlled automatic piglet feeder will be sold under the Fancom brand name and colours.
Both Fancom and PigTek are members of the CTB family of companies. With this move, CTB now created a one-stop shop consisting of 3 strong brands, offering a complete package of farm automisation (Fancom), equipment (Porcon) and feeding systems, like silos, auger systems and dry feed troughs (Chore-Time). Both Porcon and Chore-Time used to be brands within PigTek.
Cargill acquires Format International
More acquisitions from mid-December: Cargill acquired Format International, a global feed formulation software company with more than 30 years of experience and more than 5,000 users across 93 countries.
Format International specialises in the design, authoring and marketing of recipe optimisation, ingredient allocation and food and feed formulation solutions for the animal feed, aqua feed, pet food, human food, premix and other industries. Format International will become part of Cargill Feed Management Systems (FMS), a software company that operates as a separate part of the Cargill Animal Nutrition business.
Nutreco: Acquisition of Micronutrients
And as previously reported, in early December, Dutch-based agribusiness holding Nutreco announced it will acquire Micronutrients, a global company producing hydroxy-based trace minerals, headquartered in Indianapolis, IN, United States. The acquisition enables Trouw Nutrition, Nutreco’s animal nutrition business, to further strengthen its Selko Feed Additives portfolio. The transaction is expected to close in the first quarter of next year.
Micronutrients is market leader for hydroxy trace minerals, which are marketed under the global brand name IntelliBond. Hydroxy trace minerals are specialty trace minerals that due to their unique chemical structure improve stability of premix and feed and bioavailability (better digestion) in the animal compared to inorganic trace minerals.
Deal for Olam and InVivo NSA in Nigeria
Last but not least, early January, French feedstock company InVivo NSA and global agri-business Olam International signed a consulting agreement to jointly develop expertise in animal feed in Nigeria. The 2-year consulting services partnership agreement signed in December 2015 will involve technical assistance and sharing of expertise to jointly develop solutions and products in the animal feed space.
The knowledge transfer between the 2 companies will help develop solutions, formulate animal feed, characterise raw materials and implement R&D trials and protocols to enter the animal feed industry in Nigeria. As part of this agreement, both companies will tap each other’s proven expertise – Olam for its Africa experience and InVivo NSA for its animal feed proficiency.
