Basel, Switzerland-based agricultural products company
) announced the acquisition of Italian durum wheat seed company
Società Produttori Sementi. The financial details pertaining to
the deal were not disclosed.
Apart from durum wheat seed, Società Produttori Sementi also
deals with other crops such as common wheat and alfalfa. The
durum wheat is grown in over 330,000 hectares of land in Bologna.
The deal will enable farmers in Italy and other countries to
fulfill the increasing need for pasta which has a global market
worth $16 billion.
The acquisition is expected to significantly boost Syngenta's
revenues in the upcoming quarters. Recently, the company reported
mixed results for 2013, with earnings per share of $19.30, down
12% year over year. However, revenues increased 5% year over year
to $14.6 billion (at constant exchange rate).In 2014, management
expects growth in integrated sales in a similar range as 2013.
Moreover, the company expects to reach $25 billion in sales by
2020. Also, earnings before interest, taxes, depreciation and
amortization (EBITDA) margin is targeted within 24-26% by 2018.
It is also expected that the cash return to investors will
continue increasing via a hike in dividend payments.
With the acquisition, the company will expand its overseas
operations which expose it to foreign currency translation risks.
In 2013, currency translation had a negative impact of roughly
$238.0 million on the company's revenues. According to the
company, the currency environment in emerging markets is
currently not favorable.
Syngenta AG is involved in the manufacturing, marketing and
research of seeds and pesticides, enhancing crop yields and food
With a market capitalization of $34.6 billion, Syngenta
currently has a Zacks Rank #3 (Hold). Some better-ranked stocks
in the industry include
The Andersons, Inc.
Gruma S.A.B. de CV
The Scotts Miracle-Gro Company
). All these stocks carry a Zacks Rank #2 (Buy).
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