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Syngenta Embarks on Africa Drive as Dupont Snaps Up Seed Target

Syngenta AG, the world’s biggest maker of crop chemicals, said it’s focused on organic growth in Africa, as the acquisition of a local seed producer in the region by DuPont Co. intensifies competition in the potential $7 billion market.

DuPont last month successfully appealed a block on the takeover of Pannar Seed of South Africa on antitrust grounds. The business would have been a real opportunity to get a foothold in the region’s largest market for seeds, Syngenta Chief Executive Officer Mike Mack said. The $450 million market is now split between DuPont’s Pioneer and Monsanto Co.

“Because there aren’t a lot of leading companies there, my going-in assumption is most of it is going to be built internally,” Mack said in an interview.

Syngenta and competitors are vying for a slice of the African market, currently valued at $2.5 billion. Demand in the region for herbicides and other crop-protection products, currently equal to about 2 percent of the world’s total, may quadruple in size to $4 billion in 10 years. The continent’s $1.5 billion seed market -- about 3 percent of the world total - - may double to $3 billion, Syngenta estimated.

A South African court document from December cited an internal DuPont document as describing the planned acquisition as a “pre-emptive strategic move against competitors.”

Syngenta’s head of Africa, Jan Suter, testified in the court proceedings into DuPont’s acquisition that it would take about 10 years for a new entrant to establish itself in South Africa, during which time an entrant would be “burning the same cash as any of the other players in the market without any revenues.”

Fight Not Over

“The deal is far from done and dusted,” said Mariam Mayet, director at the African Centre for Biosafety, which fought Dupont’s successful appeal alongside South Africa’s competition commission. Documents seeking to overturn DuPont’s successful appeal will be filed “soon,” she said.

Pannar decided against a deal with Syngenta after collaborating with the Swiss company on hybrid seed-testing, because it saw a lack of compatible technology compared to Pioneer, according to a court filing filed in May.

South Africa, which accounts for the bulk of Syngenta’s current business in Africa, won’t be a focus for resources given the “good headstart” that Monsanto and Dupont have, Mack said. Having missed out on Pannar, it will invest $500 million and hire 700 to pursue its own expansion path in Ghana, Ethiopia, Tanzania, Mozambique, Ivory Coast, Nigeria and Kenya. Africa generates as much as $500 million in sales for the company.

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