Seed and pesticide manufacturer,
) plans to expand its foothold in the African corn seed business.
Recently, the company announced its plans to acquire Zambia-based
privately-held MRI Seed Zambia Ltd and MRI Agro Ltd, for an
undisclosed amount. The transaction is expected to consummate by
the end of 2013. MRI is a prominent name among the white corn
seed producers in Zambia.
This acquisition, subject to regulatory approvals, will enable
Syngenta to benefit from the growth potential of white corn in
the region. Syngenta's long-term objective is to generate $1
billion business from Africa by 2022. Initiatives like this will
help the company to achieve its goal.
Syngenta intends to help approximately five million farmers to
produce 50% or more than their present production volume, while
preserving the quality of land for the future. For this purpose,
Syngenta plans to invest roughly $500 million in training around
The Europe, Africa and Middle East segment of Syngenta is a
major contributor to the company's revenues, contributing roughly
30% of 2012 revenues. Syngenta has been endeavoring to increase
its crop and seed portfolio over the past few quarters. In the
first quarter of 2013, sales in Crop Protection went up 9.0% year
over year to $3.1 billion with a 16.0% rise in the Latin American
region. Seeds grew by 5.0% year over year to $1.3 billion on the
back of a 20.0% increase in the Asia Pacific region.
In addition to organic growth Syngenta is also expanding
inorganically via acquisitions. In 2012, the company completed
several major acquisitions, such as, Devgen N.V., DuPont's
insecticide business, Pasteuria Bioscience Inc. and Sunfield
Seeds Inc. We believe that all these acquisitions will contribute
significantly to revenues, going ahead.
Despite its growth strategies, we cannot overlook the high
costs Syngenta has to incur with respect to various environmental
and health safety issues. Due to this, Syngenta currently carries
a Zacks Rank #4 (Sell). Some other companies in the sector which
are performing well and carry a favorable Zacks Rank include
), each carrying a Zacks Rank #2 (Buy).
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