Perhaps it was a gauntlet being dropped on the crop protection and seed competition. Or maybe it is simply remarks for customers detailing what's ahead for Syngenta now that it is owned by ChemChina. Either way the statement issued this week after the company's General Meeting of Shareholders in Basel, Switzerland, offers insight into Syngenta's future.
The deal is done. Syngenta has a new Chairman of the Board - Ren Jianxin - who is also Chairman of ChemChina. His company has acquired a major power in seed and crop protection technology with a global footprint, so now what?
In a statement titled "Syngenta Looks to the Future" the company's officers essentially said the firm will now aim to "profitably grow market share through organic growth and collaborations, and is considering targeted acquisitions with a focus on seeds." That last part of the sentence is highlighted by the fact that Syngenta wants to become No. 3 in seeds essentially behind DuPont Pioneer and Monsanto (which is being acquired by Bayer).
Given some of the assets that may be on the table in the Bayer-Monsanto transaction, Syngenta has a chance to gain some ground on seed market share through acquisition. The company also has a solid genetic library of seeds and products. And under Erik Fyrwald, CEO of Syngenta, who was once with DuPont Pioneer, this new focus on seed offers market growth potential. Syngenta has been reported as a potential buyer of some assets that could be spun out of the Bayer-Monsanto deal, but that remains to be seen.
In the forward-looking statement Syngenta issued Ren Jianxin reaffirmed the company's operational independence noting that the existing management team will continue to run the company. In the statement, he said: "We share Syngenta's strategic and long-term vision and look forward to supporting Syngenta's growth, product offering and services. Together with its Board and Management and all its employees, we will work for the benefit of growers and to enhance food security and fight famine around the world - based on principles of technological leadership, environmental safety and sustainability."
Michel DeMare, vice chairman of Syngenta and lead independent director, added that the transaction is historic. It is the largest acquisition ever made by a Chinese company, but the deal is also focused on growth. "All our stakeholders are benefiting from this change of ownership," DeMare said. "Jobs have been safeguarded and farmers will continue to have a choice and enjoy the benefits of our investments in technology."
He added that the company will remain headquartered and pay taxes in Switzerland and it will keep major manufacturing and R&D sites in the country. He noted that Syngenta remains a standalone company with a new owner that has a "long-term vision for our industry and will invest accordingly."
Fyrwald added that Syngenta plays a vital role in the food chain. "Our ambition is to be the most collaborative and trusted team in agriculture, providing leading seeds and crop protection innovations to enhance the prosperity of farmers, wherever they are."
Fyrwald commented that ChemChina is a "stable new owner who will help us achieve this ambition…We are excited by the global prospects and particularly those in China, where we will utilize and build on our technology and know-how to promote the highest agriculture, food safety and environmental standards."
It's an optimistic statement made by management for a company moving ahead with a new ownership structure. In conversations with Syngenta employees over the last few months the message that kept coming through was that this purchase left Syngenta 'intact.' ChemChina had to sell off its ownership of Adama, a marketer of post-patent products, to Amvac; and there are some other European actions that are needed. But essentially Syngenta is Syngenta.
The effort to grow the seed business will be the top challenge for the company. Over the years Syngenta has publicly struggled in the seed business. However, Fyrwald has expressed in interviews that he is confident that the products already available offer new market opportunities. Adding other tech through acquisition would only bolster the potential to strengthen that position.
The deal is done, new management is in place. All that's left is the hard work of realizing the new growth goals. Stay tuned.