A takeover of Syngenta, the world's biggest agrichemicals
producer, by top seeds group Monsanto could kick start a round of sector
consolidation dragging in groups from Germany's BASF to Australia-based NuFarm,
Credit Suisse said.
The bank said that if Syngenta, which has rejected a $45bn
bid from Monsanto, is acquired, "this could move others [in the sector] to move
as well", putting the spotlight on potential deals within other industry
Credit Suisse highlighted German chemicals conglomerates
BASF and Bayer, and US peers DuPont, the owner of the Pioneers seeds business,
and Dow Chemical, all of which have substantial agriculture arms.
And with mergers likely requiring the sale of some
businesses to satisfy antitrust concerns, "this could drive opportunities" for
these companies - as well as for groups such as Platform Specialty Products Corp,
the which bought Arysta for $3.5bn, and NuFarm - "to buy any forced assets
FMC Corp could also be in the frame for purchases, although the
US-based group has unveiled some reluctance for further deals after last month's
$1.8bn purchase of Cheminova.
'Market share issues'
Credit Suisse rated as "low" the probability that Monsanto
would be able to acquire Syngenta without making asset disposals, given that
the groups are, in seeds, the world's top-ranked and third-ranked players
The Syngenta seed business as a whole might be worth more
than $8bn, although Monsanto may well be able to keep some parts of it, in
areas such as diversified field crops, without ringing anti-trust alarm bells.
Asset disposals would also be likely if any of the other sector
giants beat Monsanto to a takeover, with Bayer and BASF the second and third biggest
agrichemicals groups, respectively, behind Syngenta.
"Both would," if acquiring Syngenta, "likely have market
share issues in crop chemicals, and therefore cast unlikely to swallow Syngenta
whole," the bank said.
As for the US giants, Dow Chemical "would likely have some
ag chem regulatory concerns as well as there being some on overlap in insect
resistance traits [in seeds] that would be an issue," although these factors
could be overcome.
For DuPont, "while the regulatory hurdles might not be as
big" as those for Dow in buying Syngenta, there would still be "some regulatory
yellow flags that might need to be addressed".
These would surround most notably in seeds, where a combined
DuPont-Syngenta business would have a market share "towards the high 30s+"