Swiss Agrochemical Company to Purchase Biotech
Syngenta Strikes Deal with Devgen
Syngenta AG (NYSE: SYT) will buy Devgen (EBR: DEVG) for $523 million in a move that sees the Swiss agrochemical company step into the biotech seed market.
Devgen investors will receive 16 euros per share, or roughly $20.65, which is almost 70 percent higher than Devgen’s closing price as of September 20.
Syngenta is the world’s biggest agrochemicals manufacturer, and the company is following BASF SE (ETR: BAS) and Bayer AG (ETR: BAYN) in the move to purchase a biotech company. Devgen offers several biotech advantages, including rice traits that have been developed to resist disease and other crop protection formulas.
The underlying bet Syngenta is making here is that Devgen’s technology can help it overcome its hefty research costs thus far. It had better work out, as Syngenta is paying a premium of almost 14 times that of estimated 2013 sales.
Syngenta rose around 0.9 percent to 347.50 Swiss francs on Friday and was still trading up 0.4 percent as of 3:25 in the afternoon in Zurich. Overall, Syngenta has gained 26 percent this year, which places the company at a worth of $34.6 billion. Devgen rose almost 68 percent to hit 15.88 euros, and it was 67 percent higher in Brussels.
Syngenta delivered a review of its strategy to investors and analysts on September 24 in India at a capital markets day. Devgen already has established a basis in India, along with Indonesia and the Phillippines.
BASF and Bayer have both made similar moves recently; BASF announced that it will purchase Becker Underwood Inc. for $1.02 billion, while Bayer just recently bought AgraQuest for $425 million.