E. I. du Pont de Nemours and Company
's (
DD
) agricultural business Pioneer Hi-Bred received a regulatory
approval from the South African Competition Appeal Court to buy
majority share of domestic seed company Pannar Seed Limited. The
financial terms of the transaction are not yet disclosed. The
approval is subject to the companies meeting certain conditions,
including long-term investment in South Africa.
The deal will facilitate Pioneer to develop genetically
engineered crops that will specifically cater to different regions
of Africa. As per Pioneer, the deal will expand its presence in
Africa and will help them to develop innovative products and
services for the farmers across Africa.
By working with Pannnar, both the companies will have access to
more customers and will be able to deliver the products faster and
in a much more efficient manner than they would have done
individually. Moreover, Pannar will be benefited from Pioneer's
expertise and the deal will benefit Pioneer's Africa operations and
operations in the United States and Argentina.
In addition to buying a stake in Pannar, Pioneer intends to
spend 62 million rand ($7.3 million) by 2017 to establish a
regional research centre in South Africa, which will bring advanced
research and development breeding technologies to Africa. The
company has also committed 20 million rand ($2.4 million) to the
programs that help developing farmers in South Africa.
This investment is consistent with DuPont's strategy to deliver
innovative solutions for issues such as the need for increased food
production. Last month, the company released its financial results
for the first quarter of 2012. The company reported adjusted
earnings of $1.61 per share for the quarter, exceeding the Zacks
Consensus Estimate of $1.55.
The earnings growth was primarily driven by strong performance
in Agriculture and Performance Chemicals and prior-year
acquisitions of Nutrition & Health and Industrial Biosciences.
Including one-time items (customer claim charges of $50 million),
earnings came in at $1.57 per share versus $1.52 in the prior-year
quarter.
Sales grew 12% to $11,230 million in the first quarter, driven
by price hikes and strong sales in the Agriculture segment.
However, it missed the Zacks Consensus Estimate of $11,239 million.
The sales volumes for Agriculture segment increased across all
regions. However, sales volumes for other segments remained flat in
Asia.
DuPont reiterated its full-year 2012 earnings outlook of $4.20
to $4.40 per share, an increase of 7% to 12% compared with 2011,
excluding significant items.
The company competes with The Dow Chemical Company (
DOW
) and BASF SE (
BASFY
), and maintains a Zacks #3 Rank, which translates into a
short-term (1 to 3 months) "Hold" rating. We currently have a
long-term "Neutral" recommendation on the shares of DuPont.
BASF SE (BASFY): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
Report
DOW CHEMICAL (DOW): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research