The transaction includes seed processing plants and seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan seed brand, and license for the use of the Dow Sementes brand for a period of time, the Michigan-based company said in a statement. The assets generated approximately $287 million in revenues in 2016.
News of the sale comes a year since CITIC Agriculture, a platform CITIC launched to invest in the agricultural sector, established CITIC Agri Fund Management in partnership with Yuan Longping High-Tech Agriculture and two other listed agricultural companies. CITIC Agri Fund LP is the first domestic partnership established by CITIC Agri Fund Management to invest in the core value of agriculture.
Divestment of the assets “is intended to satisfy Dow’s commitments to Brazil’s Administrative Council for Economic Defense in connection with its conditional regulatory clearance of the proposed merger with DuPont,” Dow said, referring to the $130 billion merger announced in December 2015. Other assets that Dow and DuPont have already divested in order to satisfy regulatory requirements include Dow’s global ethylene acrylic acid copolymer and ionomers business; and parts of DuPont’s global crop protection portfolio and R&D pipeline and organization.
The Dow-DuPont deal is one of three mega-mergers currently underway in the agribusiness sector. The other two are: Swiss agricultural company Syngenta and China’s state-owned chemicals conglomerate ChemChina, which have received all regulatory and shareholder approvals with closing of the $44 billion deal expected this summer; and the proposed $66 billion merger between Monsanto and Bayer.
CITIC first entered the seeds business in 2014, when it became the controlling shareholder of Yuan Longping High-Tech Agriculture – one of the major companies in China producing grain, vegetable and fruit seeds, and a leader in the breeding and distribution of hybrid rice.