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Dow sells off herbicide line, amid sector shake-up

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Dow Chemical Co is selling off part of its herbicide business, amid continued talks of consolidation in the ag-chemical sector.

Dow on will sell-off its line of dinitroaniline (DNA) herbicides to Gowan Company, for an undisclosed sum of money.

The deal will include the trademark for Treflan, a herbicide that is used on field corn, cotton, and some fruits and vegetables.

Gowan will also take on a formulation and packaging facility in Alberta, Canada.

Dow's farm chemicals and seeds unit has seen falling sales, and the company is reported to have already been involved in talks over the possible sale of the entire segment, just one of a slew of merger and acquisition rumours circulating in the ag-chemical sector.

Tighter belts

Falling crop prices have led to squeezed farmer incomes, which is in turn hitting demand for agricultural inputs, such as seeds, fertiliser and crop protection chemicals.

And failed takeover approaches made by Monsanto to Syngenta earlier this year sparked a febrile atmosphere in the sector.

Dow Chemicals were last month reported to have been in talks with DuPont over the possible sale of Dow's entire ag-chemicals division.

"Everyone is talking to everyone," the boss of Dow Chemical told investors in November. ,

Syngenta discussion

In November the Monsanto executives told investors the company still had its eye on Syngenta, and expressed confidence that the sector would see major shakeups over the coming months.

Syngenta's chief executive Mike Mack stepped down last month, in the wake of the rejected Monsanto bid.

As well as the Monsanto offer, the third such bid this year, Syngenta has rejected a $42bn offer from the Chinese state-owned China National Chemical Corp, while German chemical group BASF is reported to have sought financing for a Syngenta.

And the Wall Street Journal has carried reports that Syngenta was in takeover discussions with DuPont as well.

Active discussions

In an interview with the Financial Times in November, Syngenta chairman Michel Demare said that merger and acquisition conversations in the industry were "extremely active".

"This is the result of the Monsanto approach for Syngenta, which for sure has shaken the whole industry ... It has created the huge activity in which everyone is speaking to each other," Mr Demare said.

"We are all convinced that [the sector] will look quite different in six months."

New product investments

The herbicide business to be acquired by Gowan operates in the USA, Canada, Japan, Australia and parts of Europe.

Ramiro De La Cruz, vice president of crop protection for Dow AgroSciences, said the company will "invest in innovative and differentiated products," said in the statement.

Juli Jessen, Gowan chief executive, said that the company would "defend and evolve" the herbicide for use in vegetables and turf.

By Agrimoney.com

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