In a bid to strengthen its presence in the fruits and vegetables
market, the CropScience unit of
) recently inked a deal to acquire US based AgraQuest, a global
supplier of innovative biological pest management solutions, for
$425 million (approximately €340 million).
Through this impending acquisition, whose materialization is
subject to approval by relevant authorities, Bayer aims to not only
boost its fruits and vegetables business, which currently is
responsible for 25% of sales at the CropScience division, but also
build a strong technology platform based on "green" products.
We note that a wide range of pests and diseases are controlled
by green products, thereby providing farmers with integrated
programs for pest management to maximize crop yields and minimize
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Management at the CropScience division stated that the impending
acquisition of AgraQuest is in line, with its target of recording
€3 billion in segmental sales by 2020.
We note that the CropScience unit of Bayer has been quite active on
the acquisition/deal signing front. Last month, the unit inked a
deal to buy the watermelon and melon seed business of US based
privately-held seed company, Abbott & Cobb Inc. The
transaction, following its closure, should strengthen the vegetable
seed business at Bayer.
We note that Abbott & Cobb is a key player in the market for
watermelons in the US. Moreover, the company operates in Mexico,
Australia and Asia. Through this acquisition, Bayer aims to
strengthen its presence in the promising Asian market.
The CropScience segment is one of the world's leading crop-science
companies in the area of crop protection, non-agricultural pest
control, seeds, and plant biotechnology. It develops and
markets chemical crop protection products (insecticides, herbicides
and fungicides), seeds, and integrated plant biotechnology
solutions for agricultural and non-agricultural uses.
Even though impressed by the expansion efforts of Bayer, we expect
investor focus to remain on the performance of blood-thinner
Xarelto for the lucrative stroke prevention in nonvalvular atrial
fibrillation (SPAF) indication (approved late last year). The
HealthCare unit of Bayer has co-developed Xarelto with the Janssen
Research and Development unit of
Johnson & Johnson
We currently have a Neutral recommendation on Bayer in the
long-run. The company carries a Zacks #4 Rank (Sell rating) in the