Syngenta on Thursday announced its intention to form strategic partnerships or divest its seeds business, as part of the company’s previously announced plan to accelerate shareholder value creation. Syngenta, as part of the plan, intends to sell its vegetables seeds business. The news comes soon after Monsanto attempted to acquire Syngenta but following two approaches to the Syngenta management and Syngenta’s rejections of the proposals, decided to drop plans to buy the company. Monsanto’s plans included the divestment of Syngenta’s seeds business.
Jeremy Redenius, senior analyst at Bernstein, says Syngenta’s vegetable seeds business could sell for over $2.5 billion. The operation recorded sales of $618 million over the last 12 months. Syngenta says its vegetagles seeds business is an industry-leading, high margin operation with a significant global footprint and a wide range of best-in-class varieties. The company expects the business to attract significant third-party interest. Syngenta’s total seeds business in 2014 had sales of $3.2 billion, accounting for 8% of the global seeds market and 21% of Syngenta’s total sales last year. The business reported flat sales in the past three years. Potential buyers for Syngenta’s seeds business could include BASF, Bayer, and Dow Chemical.
Syngenta also announced its intention to return significant levels of capital to shareholders through a share repurchase program. The initial program of more than $2 billion will commence in the coming weeks. This will be in addition to the progressive dividend policy which the company has followed for several years. “The Board and management are determined to accelerate shareholder value creation and our actions today underpin our commitment to do so. Our commitment is also shown by the significant capital return program that we announced today,” said Michel Demaré, chairman.
Mike Mack, CEO said, “By demonstrating and unlocking the inherent worth of our leading global seeds portfolio we can create significant additional value. I look forward to updating shareholders in the coming months on progress, including providing further visibility on the underlying profitability of our portfolio of assets. We continue to make excellent progress with our AOL program which, together with our clear intent to drive margin improvement across the business, underpins our confidence in our 2018 margin target of 24-26%. For 2015 we reiterate the full year guidance that we outlined in July.”
By Natasha Alperowicz
Source: Chemical Week
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