South African seed business Pannar and DuPont seed unit Pioneer Hi-Bred finally overcame regulatory roadblocks to Pioneer’s majority stake acquisition in the pan-African seed business of Pannar. They have completed the acquisition.
The world’s #2 seed producer, Pioneer, now owns 80% of Pannar after closing of the transaction. The deal had been long in the making, as it was announced almost three years ago, in September 2010. Yet, the parties failed to convince the South African Competition Commission of the neutrality of its competitive effects on the South African seed market, which is estimated at $450 million. The Commission rejected the deal, sending the parties back to the drawing board (and to several rounds of appeals before the South African appellate courts and tribunals).
The business rationale for Pioneer is a three-way race with competitors: according to Pioneer’s deal statement, there are approximately 75 million acres (or 30 million hectares) available for corn / maize production on the African continent. And with a rapidly growing population and economies, African nations, their cattle, and their consumers will constitute ready buyers for maize and corn-derivative products.
One thought on “Pioneer Hi-Bred completes acquisition of South African seed company”
What’s interesting about contentious but approved mergers is that there is an opportunity to see what happens after completion:
not only in regard to the conditions, such as the technology hub and breeding programmes: http://uk.reuters.com/article/2013/07/31/uk-dupont-africa-idUKBRE96U0IN20130731
but also in regard to medium-term market outcomes: http://www.namc.co.za/pages/published-reports/input-cost-monitoring, http://www.grainsa.co.za/pages/industry-reports/input-reports (although the really interesting data in this case are at the local level, where individual varieties compete according to local farming conditions “right product, right hectare”)