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DuPont reveals in talks over ag sector deals

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DuPont stoked ideas of consolidation in the struggling agrichemicals and seeds sector by revealing it was in talks over deals in the sector, which could involve a sale of the group's own operations.

Jim Borel, the executive vice-president of the DuPont agriculture business, backed a statement last week from Dow Chemical boss Andrew Liveris that "everyone is talking to everyone" in the industry.

"That's a true statement," Mr Borel said.

"And I am personally talking to the CEOs of some of the other companies."

DuPont, besides boasting a wide portfolio of agrichemicals, owns seed giant Pioneer.

'Nose in the tent'

"Something will give here on the ag side," he added, saying that "consolidation should happen" in a sector which is suffering markedly from the dent to farm spending from lower crop prices, with companies reporting particular headwinds in Brazil.

A number of groups, including FMC Corp and Syngenta as well as DuPont, have highlighted the dent from weakness in the Brazilian real which makes imported goods particular expensive, in a country where farmers and wholesalers are said to have built up stocks in expectation of currency decline.

The soft real also, for groups reporting in dollars, cuts the value of what business is done in Brazil.

In terms of deal talks, "we will make sure we have our nose in the tent to see if there's anything that makes great sense for our shareholders", Mr Borel told investors.

'We will do what's right'

Ed Breen, the DuPont interim chief executive, who took over from Ellen Kullman earlier this month, said that "I do think at some point there's consolidation here that will occur" in ag.

He signalled that, for DuPont, this could involve a disposal.

"We will do what's right for our shareholders no matter what form factor that takes.

"If we have something that will create significant value for our shareholders moving forward we will seriously be looking at it," said Mr Breen, who has a record of break-ups when chief executive of Tyco.

Appetite for deals

The comments followed the release by the group of results showing a 67% drop in earnings for the July-to-September period, reflecting a near-quadrupling to $210m in losses in agriculture.

And they come amid broad speculation of sector deals, despite the rejection by Syngenta, the world's biggest agrichemical group, of a deal with Monsanto.

Indeed, the rejection has been criticised by some Syngenta investors, and prompted a share price decline with heralded the resignation of Mike Mack as the group's chief executive.


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