American Vanguard Invests $3.7M in TyraTech - Analyst Blog

By Zacks Equity Research,

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Specialty chemicals maker American Vanguard Corp. ( AVD ) has completed its equity investment in life sciences company, TyraTech, Inc. The company has invested $3.7 million to clinch a 29.46% stake in TyraTech.

The investment achieves a major goal through the expansion of American Vanguard's participation in the development of products derived from natural sources and penetration of such technologies in non-agricultural markets.

American Vanguard's strategic investment follows the formation of a joint venture - Envance Technologies, LLC - in Dec 2012. American Vanguard, through its fully-owned unit Amvac Chemical Corporation, cut a joint venture pact with TyraTech.

Under the deal, the entities agreed to jointly develop and market pesticide products that feature TyraTech's Nature's Technology. The technology ensures the delivery of products with highest level of efficacy and safety. The collaboration agreed to market the novel pesticide products and technologies in the consumer household and lawn and garden retail markets globally.

Envance Technologies, in which Amvac holds a majority stake, has already launched its first commercial product line - Terminix Ultimate Protection - currently available at a major U.S. retail home improvement chain. The global market opportunity for such products has been forecast to be between $3.5 billion and 4.5 billion a year.

The joint venture will also develop new combinations with synthetic compounds leveraging TyraTech's proprietary Extend Technology. This will help in improving efficacy and environmental impact on an array of crops, providing Amvac with fresh growth opportunities globally.

The agreement allowed TyraTech to retain all rights to use its technology in the human and animal health markets along with other specific consumer markets. Amvac, on the other hand, have access to TyraTech's screening platform which is used to identify synergistic combinations of natural compounds.

TyraTech has developed a number of products that have been proven effective as mosquito, fly, flea and tick repellents, head lice control treatments and intestinal parasitic control agents. Several of these products are expected to be marketed during this year and 2014. The global market for such applications has been estimated to be $8 billion- $10 billion annually.

American Vanguard makes specialty chemical products for agricultural and commercial applications. The company develops and markets an array of chemicals, including insecticides, fungicides and herbicides, for crops, human and animal health protection.

American Vanguard reported solid fourth-quarter 2012 results last month with profit surging 77% year over year to $11.3 million on the back of continued strong market demand for its products. Earnings of 39 cents a share beat the Zacks Consensus Estimate by 4 cents. Revenues jumped 28% year over year to $104.3 million, beating the Zacks Consensus Estimate of $101 million.

American Vanguard is optimistic about 2013 and feels that it is well placed to meet the increasing demand for soil insecticides by maintaining full production of its products and proprietary equipment systems. The successful roll out of American Vanguard's herbicide co-marketing program with Monsanto ( MON ) is also expected to support its results.

American Vanguard currently carries a Zacks Rank #3 (Hold).

Other companies in the specialty chemicals industry with a favorable Zacks Rank are Balchem Corp. ( BCPC ) and Prospect Global Resources, Inc. ( PGRX ). While Balchem holds a Zacks Rank #1 (Strong Buy), Prospect Global retains a Zacks Rank #2 (Buy).

AMER VANGUARD (AVD): Free Stock Analysis Report

BALCHEM CP CL-B (BCPC): Free Stock Analysis Report

MONSANTO CO-NEW (MON): Free Stock Analysis Report

PROSPECT GLOBAL (PGRX): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AVD , BCPC , MON , PGRX

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