Biotech, seed, and ag chemical industry news over the last 18 months has been dominated by the process and impacts of three big mergers — Bayer buying Monsanto, Dow and DuPont merging and then splitting off a combined ag business, and ChemChina’s purchase of Syngenta.

It was inevitable that in this process of consolidation within the biotech-seed-pesticide industry, the Federal Trade Commission in the U.S., and other government bodies responsible for assuring at least a minimal amount of competition in the wake of major industry consolidation, would require some divestiture of assets in the name of preventing any one company from gaining too much clout in specific markets.

Anyone familiar with the industry expected BASF to take advantage of opportunities to pick up assets as this process unfolds, and so the recent announcement of a $7 billion deal between BASF and Bayer comes as no surprise.

For that $7 billion, BASF will gain control over the entire Liberty (glufosinate) herbicide portfolio and production facilities worldwide, as well as all Liberty-Link seed assets (glufosinate-resistant corn, soybeans, and cotton, and the associated intellectual property).

Most press coverage of the restructuring of the biotech-seed-pesticide industry has focused on a future dominated by three global titans, but as a result of BASF’s desire to take control of divested assets, there will actually be four.

The industry restructuring going on in the last couple of years is hugely significant for two reasons that rarely receive any mention or critical inquiry. First, 20 years ago there were, for the most part, three separate industries producing seeds, pesticides, and new tools to deploy genetic engineering in plant-based agriculture. Once these mergers are complete, there will be one industry where there used to be three. One might ask how that change escaped the attention of  government agencies responsible for assuring competition?

Second, going forward, all major biotech-seed-pesticide companies will be heavily vested in, and dependent on returns from past and ongoing investments in genetically engineered crop technology. In the past, two (BASF and Bayer) of the largest five seed-pesticide firms in the world had resisted the temptation to become heavily involved with GE-based plant breeding and technology development. Soon, all four will be “all in.”

Source:

Maria Sheahan, “BASF to harvest seeds, herbicide businesses from Bayer for $7 billion,” Reuters, October 13, 2017.