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Syngenta Group bolsters position in biologicals

TAGS: Business
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Italy-based Valagro acquired and becomes part of Syngenta Crop Protection

Updated with interviews from Syngenta and Valagro – 11:30 a.m. CDT – 10/6/2020

The biologicals market has been heating up globally as farmers and consumers seek other ways to boost production that don't involve synthetic chemicals. Major crop protection companies are investing in these new tools in their research and development pipelines, and they're buying the expertise too. The latest acquisition news comes from Syngenta Group with news that it has purchases Valagro.

Corey Huck, global head biologicals, Syngenta, notes that his company had been involved with biologicals with bio controls and biostimulants "but in the overall scheme of things at Syngenta it's a small proportion of our sales."

He explains that the technology is rising quickly, and it is an area of science that has been advancing, the key was developing strong science to support the use and efficacy of biologicals. This is an area where Valagro has worked since it was founded in 1980.

With a 40-year track record working with biologicals, Syngenta can jumpstart its position in this burgeoning market, which is expected to double in size over the next five years. In its corporate statement announcing the news, the company notes that the investment "positions Syngenta Crop Protection as one of the key global companies poised to shape the rapidly growing biologicals market."

Farm Progress spoke with Huck, and Giuseppe Natale, CEO, Valagro about the acquisition. Natale explains that being bought wasn’t part of the company's long term plan, however as the two firms started interacting that changed.

"We were planning a different journey for the company," Natale says. "Our preferred [approach] was an [initial public offering] two or three years from now. I think that the alignment [with Syngenta] was so good that we entered into the discussions and that's where we are today."

Valagro brand retained

Under the agreement, Valagro will operate as an independent brand in the market within the Syngenta Crop Protection business. Valagro has seen about 10% annual growth each year from 2009 to 2019 with revenes nearing $175 million in 2019. The company's researchers work in the areas of plant nutrition and plant care working with biostimulants and specialty nutrients.

Based in Atessa, Italy, Valagro serves the global market with more than 700 employees, 13 subsidiaries and eight production sites globally. The company claims a strong presence in Europe and North America, and is growing business in China and Latin America.

While a standalone brand, Huck sees opportunity for Syngenta Crop Protection. "The crop protection sale is different from the seed sale and the biological sale is different altogether," he says. "A product that performs one way in the Pacific Northwest works entirely differently in Florida."

That specialized sales approach is what Valagro can bring, given the science it employs developing a product, including genomics to better understand the mode of action for the products it develops. And farmers are seeing a change in the discussion surrounding crops too.

Huck explains the evolution of biologicals in agriculture parallels what's happening in human health: "We've gone from dealing with back pain and putting time and effort into antibiotics and how to address all the ailing parts of the human instead of continuing to focus on the wellbeing of the person," he says. "We work today to offset some of the biotic stresses for healthier humans. I don't think plants are any different and I think farmers realize and understand that."

Natale adds that plants utilize about 50% of the nutrients available to them today. "Of course that's a problem to solve for the environment but also for the productivity of the crop," he says.

Turnkey acquisition

In its corporate statement Syngenta reports the move enables the company to build a world-leading biologicals business. Valagro's established portfolio of biostimulants and specialty nutrients will complement the Syngenta Crop Protection range of biostimulants and biocontrols, and a future pipeline of products.

Biocontrols and biostimulants, natural solutions for pest, disease control and crop improvement are of growing importance to farmers in their efforts to achieve sustainable production. The acquisition is "fully in-line with Syngenta Crop Protection's strategy to provide growers with additional complementary choices of products and technologies in order to effectively and sustainably care for their crops by managing resistance, enhancing soil health, reducing residues in crops and addressing consumer demands," the company states.

Erik Fyrwald, CEO of Syngenta Group adds that the acquisition underlines the company's growth ambitions in this area. "This investment also forms part of our $2 billion commitment to help farmers address the effects of climate change and improve agriculture sustainability as part of our Good Growth Plan."

Adds Giuseppe Natale, CEO Valagro: "This agreement will open up new, previously unimaginable growth prospects for Valagro group worldwide. Now that we are part of a company with the resources and ambition of Syngenta Crop Protection, we have exciting new opportunities for our innovation to better deliver even more options for farmers."

Financial terms of the transaction were not disclosed.

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