Starboard, in its letter to Corteva’s chairman, said it had identified someone new for the top job, but declined to name the person.

Corteva’s chairman Greg Page said the board unanimously backed CEO Jim Collins.

The agricultural supplier said while it agreed with many points raised by Starboard, the activist investor had not discussed with the company the specific operational recommendations on how to improve performance.

“We believe we are at an important inflection point in our company’s trajectory as the extensive investments we have made to enhance productivity over the last 18 plus months will begin to accelerate their impact on earnings,” Page said.

Starboard CEO Jeffrey Smith last year criticized Corteva’s financial performance, noting its cash flow margin of 14.4 per cent lags behind peers and that the share price could be closer to US$55.

Corteva’s shares, which had risen 1.3 per cent in early trading, fell about 2.5 per cent to US$42.57.

The company, like other agricultural suppliers, has struggled in recent years as excess grain supplies have hurt crop prices and low farmer incomes have made it tough for companies to raise prices for pesticides or seeds.

Corteva, which spun out of industrial conglomerate DowDupont in 2019, has shut down some facilities and recently said it would look to cut some more costs due to the COVID-19 pandemic.

Starboard is known for its operational know-how and often proposes to add new directors to a company’s board. It had won 17 board seats at four companies in the first half of 2020.

The activist investor owns 11.7 million shares, or a 1.6 per cent stake, in Corteva, according to Refinitiv Eikon data.

— Reporting for Reuters by Arathy S Nair in Bangalore.

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The unit, which supplies everything from soy-based food ingredients to tablet binders, could be worth at least US$20 billion as a standalone entity, Bloomberg said.

DuPont declined to comment on the unit’s divestiture.

The Wilmington, Delaware-based company said in February that its overall goal was to divest about 10 per cent of its portfolio.

DuPont was a part of DowDupont until a split earlier this year. DowDupont in June also spun off the merged company’s seed and crop protection businesses under the name Corteva, and in April spun off its materials science division under the Dow name.

The nutrition and biosciences unit, DuPont’s biggest revenue generator in 2018 on a pro-forma basis, was hit by lower sales of food, beverage and pharma solutions in the latest reported quarter, and brought in four per cent lower sales than a year earlier.

— Reporting for Reuters by Debroop Roy and Manojna Maddipatla in Bangalore.

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The Delaware-based agribusiness, under the name Corteva, Inc., is scheduled to begin “when-issued” trading on the NYSE on May 24, and “regular way” trading on June 3, under the ticker symbol “CTVA.”

DowDuPont — the holding company formed in 2017 by the merger of Dow and DuPont — announced Wednesday that the U.S. Securities and Exchange Commission has declared Corteva’s registration statement effective, and that the DowDuPont board of directors has approved Corteva’s spinoff.

“This milestone marks the completion of all the regulatory requirements for us to separate into a leading pure-play independent agriculture company on June 1,” Corteva CEO James Collins said in a release.

“Corteva Agriscience is well positioned to drive long-term value for shareholders as we leverage our balanced portfolio and robust innovation pipeline to deliver the complete solution farmers need to maximize yield and profitability,”

The spinoff calls for each current shareholder in DowDuPont to receive one share of Corteva common stock for every three shares of DowDuPont common stock they hold.

DowDuPont on June 1 will also rename itself DuPont de Nemours, Inc., doing business under the name DuPont.

The new DuPont will operate the two companies’ combined specialty chemical product operations. Dow and DuPont’s combined materials science divisions, which were spun off in March, now operate under the Dow name.

Corteva’s operations in Canada include seeds, sold under the Pioneer and Brevant brand names, with herbicide-tolerant trait systems including Enlist, Optimum GLY, SmartStax and, since February, Clearfield.

Corteva’s roster of crop protection chemicals in the Canadian market includes, among others, herbicides such as Enlist Duo, Lontrel, Frontline, Grazon and Tordon; insecticides such as Lorsban and Delegate; seed treatments such as Lumiderm, Lumisena and Lumivia; and fungicides such as Acapela and Nova.

Worldwide, the Corteva agriculture segments have booked combined annual net sales of over US$14 billion in recent years. Their combined EBITDA (earnings before interest, taxes, depreciation and amortization) for 2018 came in at US$2.05 billion. — Glacier FarmMedia Network

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Shares of the new division, Dow, will begin trading on the New York Stock Exchange on Tuesday.

Dow and Dupont completed a US$130 billion merger in 2017 to form DowDuPont and had outlined a plan to create three separately traded companies focusing on agriculture, plastics and specialty products.

Corteva, the agriculture unit, is set to separate from the new specialty chemical maker DuPont on June 1.

— Reporting for Reuters by John Benny in Bangalore.

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Warren, a U.S. senator from Massachusetts and a fierce Wall Street critic, released a broad plan that she said would make it easier for small farmers to survive in the face of growing corporate consolidation in the rural economy.

She singled out several big agriculture corporations, naming Tyson Foods, Bayer-Monsanto and Dow-DuPont, and said the Bayer-Monsanto merger should not have been approved. Under her plan, regulators would review “anti-competitive” agricultural mergers and break up integrated businesses that control many different levels of the farming chain and markets.

“We can make better policy choices  – and we can begin by leveling the playing field for America’s family farmers,” Warren wrote in a Medium blog post outlining her proposal.

Warren released the plan ahead of a campaign trip to Iowa, a farm state that kicks off the Democratic presidential nominating contest in February 2020. During her visit, she will participate in a Democratic policy forum on rural issues as the party searches for ways to reverse Republican President Donald Trump’s win over Democrat Hillary Clinton in rural areas in 2016.

Earlier this month, Warren also proposed breaking up big tech companies such as Amazon, Google and Facebook to promote competition in the technology sector. She has made her populist economic message the heart of her campaign in a growing Democratic field of contenders, arguing the economy is rigged for corporations and the wealthy.

“Bad decisions in Washington have consistently favoured the interests of multinational corporations and big business lobbyists over the interests of family farmers,” Warren said in her agricultural proposal.

“Mergers mean that farmers have fewer and fewer choices for buying and selling, while vertical integration has meant that big agribusinesses face less competition throughout the chain and thus capture more and more of the profits,” she said.

Warren’s plan also would end “contract farming” by conglomerates, create a national right-to-repair law that allows farmers to repair their own equipment or take it to a mechanic of their choice instead of an authorized agent, and establish country-of-origin rules to require beef and pork producers to label where their livestock was raised and slaughtered.

— John Whitesides is a Reuters political correspondent in Washington, D.C.

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Equipment firms, precision agriculture companies, fertilizer makers and crop protection producers, all are getting swept up in the trend.

Some observers are optimistic, while others are much more cautious.

The companies themselves argue that the deals will increase efficiencies and allow for better services as newly joined companies pool resources. Others have argued that those pooled resources might be turned to improvements in research and innovation.

At the same time those same deals have prompted concern that merging major agribusiness players might reduce competition and leave farmers in the cold.

Corteva Agriscience

One of the blockbuster deals saw Dow and DuPont merging at the end of this past August to create DowDuPont. Simultaneously the new company announced it would be splitting along industry lines, creating an agriculture-only business, later dubbed Corteva Agriscience, which will separate from its parent firm in the coming months.

Bryce Eger, the Canadian commercial unit leader, says that move will ensure two large legacy organizations with significant involvement in the agriculture sector will combine into one unit that has an ‘agriculture only’ focus, something that would allow even greater achievements.

“They were conglomerates, so they were involved in a ton of different products,” Eger said. “As the merger came together, there was a realization that getting the organization split into industry specific, or pieces of business, that were going to allow the businesses to grow and have the focus that was required was going to be something that was going to be very beneficial.”

The parent company put the benefits of the merger at $3 billion in “cost synergies” and $1 billion in potential growth.

The merged DowDuPont argues that its agricultural offshoot will allow a broader range of products to hit the market faster as a result of joining forces.

The finalized merger came less than a month after news that DuPont would purchase agricultural software and analytics company Granular, a move that gives DowDuPont, and now Corteva, more foothold in big data, a growing sector as precision agriculture continues to gain popularity.

The deal put Granular’s co-founder and CEO, Sid Gorham, at the head of DuPont’s digital agriculture, including the parent company’s existing agronomic software, Encirca.

“Ultimately, you take the Granular piece of business farm management software, you put it with digital agriculture, with is our Encirca platform, and you have an output that actually allows farmers to manage their farms more efficiently, more effectively, and make better decisions,” Eger said.

Big names

Corteva’s announcement isn’t the first deal between agribusiness giants to make headlines in the last year.

Bayer’s US$62.5-billion bid for Monsanto is now wending its way through the international approval process, with some divestments being required by the various national regulatory agencies where the companies do business. So far the U.S., China, Australia, Brazil and the European Union have given the deal their seal of approval.

Also in the seed and chemical sector, ChemChina completed its US$43-billion takeover of Syngenta in early May 2017, while also in merger talks with Chinese state-owned Sinochem, a deal that experts put at US$120 billion and that the companies hope to have the green light for this year.

The list goes on.

January 2018 also saw the official launch of Nutrien, the merger between PotashCorp and Agrium, two of the largest fertilizer producers in the world. The joined company now counts for 20,000 jobs across 14 countries, CBC reported earlier this year.

In the machinery sector, John Deere fell through on plans to acquire Precision Planting before the company ultimately went to AGCO, but acquired California-based precision agriculture company Blue River Technology instead.

Within Manitoba, Winnipeg’s own MacDon Industries sold for $1.2 billion to Guelph’s Linamar Corporation in December.

“This agreement is the result of long and careful consideration regarding what is best for the future success of the company,” MacDon Industries said in a release at the time.

Some unease

The long line of mergers has been less than welcome for producer groups worried that consumer power might drop as commercial power concentrates.

Dan Mazier, president of the Keystone Agricultural Producers, says there have been a number of resolutions on the issue in recent years.

“When you look at it, it’s not just chemical companies or not just seed companies, it’s also input companies like fertilizer,” he said, although he later added that farmers still have options in the current market.

Mazier pointed to what he calls a “herd mentality” in agriculture, with large companies investing into research where they perceive most profit.

Such a model worked in developing better soybeans for Manitoba’s climate and may yet help western Manitoba producers more consistently grow corn, he said. At the same time, he argued, the same centralization that pushes needed research may lead to inflated prices.

“They have to recoup their costs for the research and all that, but how much?” he said. “I think you could just tell by their research or their stock values that maybe the focus on shareholders’ value versus the service they’re supposed to be providing, either to the agriculture industry or to society, needs to be balanced off and I don’t think that there’s any panel or Competition Bureau that addresses that.”

Mazier argues that government and Agriculture and Agri-Food Canada in particular should take a stronger role in monitoring the impacts as companies merge.

Enough regulation?

Jared Carlberg, agricultural economics professor at the University of Manitoba, says the recent mergers are only a small proportion of agribusiness, although many have involved significant market share.

“I think the mergers capture a lot of attention when they’re among industry or between industry leaders, so it’s fair to say they’re significant,” he said. “It’s fair to say that they’re in industries that do affect farmers directly and the ag sector, obviously.”

But while Carlberg agrees on the importance of free market competition for the consumer, he does not share KAP’s level of concern.

Any deal must first make it past the Competition Bureau and environmental regulatory groups, he said, arguing that those agencies often keep a close watch on potential impacts and that farmer and consumer interests are inevitably part of those rulings.

“I think that the mergers do have the potential to impact producers,” he said. “Looking at it from a company standpoint, many of these industries are highly competitive. There’s lots of companies out there all trying to earn the farmers’ dollars, so they are doing it for business reasons…”

Divestments are often a feature of such regulatory approvals, he added, something explicitly done to protect competition in the market.

The Competition Bureau has previously asked KAP for comment when gauging the impact of a new merger or which divestments to require, Mazier said.

KAP also noted that any violation of the terms set out by the Competition Bureau could and should be reported to that body.

On the horizon?

Farmers may expect more mergers in the future, Carlberg predicted, and warned that farm groups should stay vigilant to protect the interest of their members. At the same time, he said, those same mergers may offer efficiencies to bring costs down.

“I think they will always look for opportunities to improve their business model,” he said. “I’m very confident in our farm group leaders to take both these companies and regulators to task if they do perceive there to be conditions forming that will result in unfairness. We as academics certainly have a role to play and are available to assist farmers and farm groups as they explore the potential implications of these types of mergers.

“I do think you’ll see them continue. I do think, in some cases, there can be wins for more than just the company,” he said.

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DowDuPont announced Monday the agribusiness, which will include DuPont Crop Protection, DuPont Pioneer and Dow AgroSciences, will rebrand as Corteva Agriscience after its spinoff, expected by June 1 next year.

The name, to be pronounced coreTAYvah, combines cor and teva, a Latin root word for “heart” and a Hebrew word for “nature” respectively.

The company, which closed on their merger deal in September, unveiled the ag division’s name and logo Monday at the Commodity Classic farm trade show in Anaheim.

The company earlier this month unveiled a combined premium seed brand, Brevant, which will replace the Dow Seeds brand in Canada and some countries in Europe and the Coodetec and Biogene brands in Brazil this year.

The Corteva brand “acknowledges our history while looking forward to our commitment to enhancing farmer productivity as well as the health and well-being of the consumers they serve,” James Collins Jr., the agriculture division’s chief operating officer, said in a release.

DowDuPont billed Corteva on Monday as “a market-shaping, standalone agriculture company with leading positions in seed technologies, crop protection and digital agriculture.”

Corteva, Collins said, will “continue to invest in some of the most recognized and premium brands in agriculture: Pioneer, Mycogen, and the newly launched Brevant seed brands, as well as our award-winning crop protection products, such as Aproach Prima fungicide and Quelex herbicide with Arylex active, while bringing new products to market through our solid pipeline of active chemistry and technologies.”

Corteva’s corporate headquarters, DowDuPont previously announced, will be in Wilmington, Delaware, with “global business centres” in Johnston, Iowa, and in Indianapolis.

The two sites in the Midwest are expected to serve as homes for the bulk of Corteva’s “leadership of business lines, business support functions, R+D, global supply chain, and sales and marketing capabilities.”

Apart from its ag business, DowDuPont also announced Monday its materials science division, when spun off, will be branded as Dow, with the Dow diamond as its logo. The specialty products division, when spun off, will go with the DuPont brand. — AGCanada.com Network

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The newly-combined company, formed by the merger of chemical giants Dow Chemical and DuPont four months ago, said its net sales came in at $20.1 billion versus comparable net sales – which the company terms “proforma” sales – of $17.7 billion a year earlier (all figures US$).

It also said it planned to move ahead with plans to split the new company into three separate parts, starting with the Materials Science unit by the end of the first quarter of 2019. Agriculture and Specialty Products are expected to follow by June 1, 2019.

The chemicals giant saw prices rise by about five per cent across markets in the fourth quarter, while volumes — a proxy for demand — rose six per cent.

“In developed economies in particular, such as the United States, Germany, France, Canada and the U.K., we continue to see strong leading indicators of broad-based growth,” executive chairman Andrew Liveris said in the results statement.

“Furthermore, early signs from the business community point to U.S. tax reform as a catalyst for further domestic capital investments.”

Currently trading at a market value of about $176.9 billion, Dow and DuPont completed the $130 billion mega-merger in September. That created the world’s largest chemical maker, until the company goes through with a plan to split into three companies.

DowDuPont’s merger was welcomed by investors as a way to streamline the companies’ sprawling operations by combining overlapping businesses.

The company said on Thursday it was now planning to save $3.3 billion in costs on the back of the merger — slightly more than the $3 billion it expected to save earlier.

For the reported quarter DowDuPont saw a $1.1 billion benefit from lower U.S corporate taxes, but still posted a net loss of $1.2 billion from continuing operations — substantially the result of merger-related costs.

Adjusted for those and other one time effects, the company said it earned 83 cents on a share. Ahead of the numbers Wall Street was expecting it to make 67 cents a share, according to Thomson Reuters I/B/E/S numbers.

Shares of the company dipped to $75 in premarket trading on Thursday compared to the previous close of $75.58.

— Reporting for Reuters by Nivedita Bhattacharjee.

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The government agency that regulates pesticides issued a statement to Glacier FarmMedia reiterating its support for the current Canadian labels.

The U.S. Environmental Protection Agency (EPA) last week increased restrictions on the use of dicamba sprayed over growing crops, after the first season of use of dicamba-resistant soybeans turned up about three million U.S. acres with crop damage.

There appeared to be a much lower level of damage in Canada, where there was a campaign to encourage farmers to only use the system with pre-plant and pre-emergent timing and where there are fewer herbicide-resistant weed challenges.

The dicamba-resistant system, called Xtend, is licensed and used by Monsanto.

For its part, Monsanto Canada said in an email its Canadian growers’ experience with the Xtend system in 2017 was “overwhelmingly positive,” with “very few” calls from growers, applicators and/or retailers about off-site herbicide movement.

The EPA made application of dicamba over growing crops a “restricted use,” meaning it can only be applied by certain licensed applicators, with special training, or workers under their supervision.

Farmers will have to maintain specific records regarding the use of these products to improve compliance with label restrictions.

Maximum wind speeds allowable for the use of the product have been reduced from 15 to 10 mph (from 24 to 16 km/h) and the time of day of allowable use has been reduced. The EPA has also made more provisions for making sure there aren’t sensitive crops close to where spraying happens and changing language on cleanout of tanks to prevent cross-contamination.

The EPA says it worked with dicamba manufacturers Monsanto, BASF and DuPont on the label changes.

Health Canada is the supervising department for the Pest Management Regulatory Agency, which evaluates and approves pesticides in Canada.

In its statement Health Canada said it is aware of the dicamba drift challenges in the U.S. and “to protect the environment, Health Canada has already mandated that labels of dicamba products include spray drift precautions, use directions and buffer zones. The department is confident that these existing requirements address issues such as those identified in the U.S.”

The Canadian label says optimum application conditions are between five km/h and 16 km/h and contains specific instructions on tank cleanout.

A Monsanto Canada spokesperson last week said no dicamba label changes are currently anticipated from the PMRA. Health Canada said it “will continue to monitor the situation and will take action as necessary.”

Noting crop protection companies in Canada are federally required to report any claims involving adverse effects of pesticides, Monsanto’s spokesperson said data on the Xtend system for the 2017 season so far showed inquiries about product performance, off-target movement and “crop response” involving fewer than 900 acres in all, or about 0.1 per cent of Xtend acres planted across Western and Eastern Canada.

— John Greig is a field editor for Glacier FarmMedia based at Ailsa Craig, Ont. Follow him at @jgreig on Twitter. Includes files from Dave Bedard of AGCanada.com.

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Philadelphia-based FMC Corp. announced Thursday it received the final approval needed, from the Competition Commission of India, to close the deal the company reached with DuPont in late March.

FMC’s deal allows DuPont to shed several of the assets required to meet regulators’ conditions for its own merger with Dow Chemical, which closed Sept. 1.

The deal, an asset swap which will see DuPont get FMC’s health and nutrition business plus US$1.2 billion cash, is now on track to close effective Nov. 1, FMC CEO Pierre Brondeau said in a release.

For Canadian farmers, the deal will see FMC take over DuPont’s portfolio of cereal broadleaf and pre-seed burn-off herbicides in Canada.

The deal also gives FMC the PrecisionPac herbicide dispensing system; DuPont’s experimental farm at Hanley, Sask., south of Saskatoon; a packaging plant in Calgary; and a chemical manufacturing facility at Manati in Puerto Rico.

The Competition Bureau of Canada, which cleared the Dow/DuPont merger in June, noted the deal will also give FMC DuPont’s Stine facility at Newark, Delaware.

The Stine plant, the bureau said, today houses DuPont’s “primary herbicide discovery and development efforts for Canadian markets.”

FMC, which maintains a Canadian office in Saskatoon, is an “acceptable” buyer for the DuPont assets, with “the managerial, operational and financial capability to compete effectively in Canada,” the bureau said in June.

FMC’s Canadian brand portfolio includes Aim, Authority, Command 360 and Focus herbicides, Rovral, Fracture and Fullback fungicides and Pounce, Beleaf and Capture insecticides. — AGCanada.com Network

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