Agriculture: The next M&A growth sector?
Forbes | 1 April 2016

Agriculture: The next M&A growth sector?
 
by Matt Porzio ,
 
When analyzing M&A trends in agriculture, there are two main sub-sectors to focus on: 1) farming; and 2) agribusiness, which includes companies that make fertilizer, insecticides, chemicals and seeds. Historically, the real action has been in the latter and there’s been tremendous consolidation whereby only a handful of players dominate the industry. Trends in the former, however, suggest that farming may soon become a hotbed of M&A activity.
 
Watering money field
 
Farming, particularly in most of the Southeastern and Midwestern U.S., is a large, yet highly fragmented, insular marketplace, typified by family farms, that is ripe for consolidation.  Subsidized farming is relatively healthy and stable, economically speaking, though historically have undergone wrenching periods of belt-tightening and collapse. For those reasons, farming has not been a sector with much deal flow, and professional representation by investment bankers within farming is nearly non-existent.
 
The landscape may be changing, which would make farming a more attractive sector for deal professionals. Some of the current trends that are creating opportunity include:
 
 
As mentioned above M&A and consolidation in large agribusiness has been active for years, to the point where the industry is now dominated by just a few players. Should the recently announced $130 billion Dow-DuPont merger be cleared, the new enterprise will control 25% of global commercial seed sales and 16% of world pesticide sales. And there’s likely more consolidation to come. The Dow-DuPont announcement rekindled Chinese state owned ChemChina’s $43 billion bid for Swiss company Syngenta; that deal was announced in early February. Sygenta agreed to the takeover bid after spurning a $46.5 billion offer a year ago from Monsanto.
 
Although the deals in this sub-sector seem to be confined to the larger, more traditional players in the space, the world’s biggest farm machinery companies, like John Deere & Company, may soon get into the act and make vertical acquisitions a focus of their growth strategy. They already have the hardware, are making deep investments in the software (agricultural data) and could quickly move to integrate seeds, pesticides and fertilizers into their portfolios.
URL to Article: https://farmlandgrab.org/post/view/25947

Source: Forbes 
http://www.forbes.com/sites/mattporzio/2016/03/31/agriculture-the-next-ma-growth-sector/#484270385015