Dow Chemical Buys Cal/West Seeds - Analyst Blog

By Zacks Equity Research,

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Dow AgroSciences LLC, a unit of The Dow Chemical Company ( DOW ), has purchased the assets of California-based high-quality seed producer Cal/West Seeds. The terms of the deal were not revealed.

Under the terms of the pact, Dow AgroSciences has bought substantially all of the assets of Cal/West Seeds, a leading supplier of alfalfa, clover, and other crops to seed companies across the globe. The acquired assets include Cal/West and Producer's Choice brands, Cal/West SRL Argentina as well as the R&D and production facilities in California, Washington, and Wisconsin.

The acquisition, which augurs well for Dow AgroSciences' business model, broadens its alfalfa business and reinforces its global forages franchise. Moreover, it complements the alfalfa platform of Dairyland Seed, which was purchased by Dow AgroSciences in 2008.

Indiana-based Dow AgroSciences is a leading provider of crop protection and plant biotechnology solutions. Revenues from Dow's Agricultural Sciences segment jumped 12% year over year to a record $1.7 billion in the second quarter of 2012, benefiting from new products and healthy market trends.

Revenues from Seeds, Traits and Oils business surged over 30%, driven by new seed technologies. Dow Chemical's Corn business continues to see strong demand from farmers of SmartStax hybrids in North America and increased adoption of Herculex technology in Latin America.

Dow Chemical, which competes with EI DuPont de Nemours & Co. ( DD ), is benefiting from strong fundamentals in agriculture and food markets. The company's performance in the emerging markets remains strong and we expect this to continue moving ahead. A string of innovative products in its pipeline also adds to its strength.

Dow Chemical currently holds a short-term Zacks #3 Rank (Hold). We have a long-term Underperform recommendation on the stock.

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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: DD , DOW , EI

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