Dow AgroSciences has announced its purchase of Rohm and Haas Company's agricultural business. The transaction, with a price tag of approximately $1 billion, was completed June 1.
The acquisition gives Dow ownership of all Rohm and Haas's agricultural chemicals business, including fungicides, insecticides, herbicides, and license to the company's biotechnology assets.
“We are very pleased with this acquisition, which is consistent with our overall growth strategy of adding value through mergers, acquisitions and alliances and our own research and development efforts,” says A. Charles Fischer, president and chief executive officer of Dow AgroSciences. “The new product lines we've acquired complement and enhance our portfolio and increase our global scale and reach, allowing us to better serve our customers.”
Annual sales for the combined entity are expected to reach $3 billion annually.
In an interview with Farm Press, Fischer shared his outlook for both the company's future and the future of the agricultural chemical industry.
Q: What synergies will the acquisition of Rohm and Haas bring to Dow?
A: “From a technical standpoint, it will bring $500 million in new sales to our company which will allow us to become more efficient and more competitive in the market.
“It will bring several new products under the Dow label, including a family of fungicide products which will especially strengthen our presence in the vegetable, and tree and vine markets. The addition of Rohm and Haas products will also strengthen our turf and ornamental offering and will fit in very well with the products we sell in our coastal, Sunbelt area,” Fischer says.
Q: What products are Dow AgroSciences acquiring that will mesh with what already exists in the company's agricultural chemical mix? Does the merger offer a better cotton or peanut package for Dow, such as new fungicide material to go along with a strong herbicide or insecticide package?
A: “While I don't look at this as a huge addition for the key Southern corn, soybean, cotton and rice markets, we will be able to offer some additional products in these markets,” he says.
[According to Stan Howell, vice president, North America, for Dow AgroSciences, the acquisition adds several “key” products to Dow's product line including the cotton insecticides Confirm and Intrepid. Also now under the Dow label are the miticide Kelthane, for use in cotton, soybeans, citrus, pecans and walnuts, the herbicides Stam and Goal, and the fungicide Dithane.]
Q: Several chemical company representatives remarked at the 2001 Beltwide Cotton Conference that the trend is for companies to provide growers with one-company solutions to crop problems. How will this acquisition help make that possible for Dow?
A: “Of course, anytime we can add products that are valuable to growers it makes our full offering better. But, I guess I have a little different view than other industry members may have,” Fischer says. “While many companies would like to offer a broader range of products, it's my opinion that growers have too many diverse needs to think they will ever get everything they need from only one supplier.
“Dow AgroSciences doesn't intend to ever provide a full package of products to farmers. While others may claim that they can, because this is a technology business, a farmer can not take the second-best product from any one company. He has to get the one best product that fits his needs and his farming operation,” he says.
“It's not in a farmer's best interest to rely exclusively on one company. Yes, we would like to have more products to offer growers because that makes us more efficient. But in the end, this is a performance-driven market where growers will continue to demand the best products for their unique situation, and they need to be able to go get that product wherever it may be available,” Fischer says.
Q: Does this acquisition alter your company's commitment to biotechnology in any way?
A: “No, it does not. In fact, among the assets acquired from Rohm and Haas is a gene-switching technology, which could potentially enhance our product offerings,” he says.
“This acquisition does not take away from our intention to be a major biotech participant in the long-run. Anything that makes our company stronger, like an acquisition of this kind, strengthens our ability to become a long-term player in biotechnology,” Fischer says.
Q: In this world of increasing consolidation, do you foresee one last-standing agricultural chemical company at some point in the future?
A: “There are most definitely fewer companies today than there were yesterday and there will be fewer tomorrow than there are today. However, I do not see it coming down to one or two players,” Fischer says.
“I think there will be several — three, four, or five — big research-based agricultural chemical companies in the future. But, there will still be a space for niche players who fulfill a specific need and deliver a specific value to farmers.
“If I were a grower or a dealer, I wouldn't be concerned that there will not be a competitive environment due to consolidation,” he says. “While there will be fewer of us, we will maintain or increase the amount of research we do, and we will be competing very aggressively against each other for farmers' business.”