After years of mergers and acquisitions (M&A) activity in the late 1990s and early 2000s, six pesticide manufacturers represented over 76% of global sales as of 2011. With additional mergers in process as of July 2016, five top pesticide companies dominate global pesticide sales.

Syngenta

Headquartered in Basel, Switzerland, Syngenta AG (NYSE: SYT), with a market capitalization of $36.53 billion as of July 2016, was formed through the merger of Novartis Agribusiness and Zeneca Agrochemicals in 2000. The company develops commercial herbicides, fungicides and insecticides for a variety of crops, including corn, cereals, fruits and vegetables, as well as home and garden pesticides for consumers. In addition to being the largest producer of pesticides in the world, with 2011 sales of $10.16 billion, Syngenta is the third-largest seller of genetically modified seeds. In August 2015, Syngenta rejected an acquisition offer from Monsanto Company (NYSE: MON) valued at $47 billion, saying that the offer was too low; internal estimates of the company's value were closer to $62 billion. In February 2016, Syngenta agreed to be purchased in cash for $43 billion by ChemChina.

Bayer

Based in Leverkusen, Germany, Bayer AG (OTC: BAYRY) develops and sells health care and agricultural products to markets around the world. The company's market cap as of July 2016 was $83.78 billion. Its CropScience division produces genetically modified seeds and pesticides for commercial and consumer uses. With pesticide sales of $7.52 billion in 2011, Bayer was the second-largest seller in the category. On May 19, 2016, Bayer made a $62 billion buyout offer to Monsanto based on its interest in Monsanto's seed business. Monsanto rejected the offer less than one week later, saying that the terms were incomplete and financially inadequate.

Dow and DuPont

The Dow Chemical Company (NYSE: DOW), based in Midland, Michigan, and E. I. DuPont de Nemours and Company (NYSE: DD), based in Wilmington, Delaware, agreed to a merger in December 2015. Valued at approximately $120 billion, shareholders approved the merger in July 2016. The cumulative pesticide revenue of Dow and DuPont amounted to $7.14 billion in 2011. After the completion of the merger, the renamed DowDupont plans to split into three separate companies: an agricultural group, a special sciences concern and a material sciences company.

BASF

Headquartered in Ludwigshafen am Rhein, Germany, BASF SE (OTC: BASFY), with a market cap of $72.1 billion, offers pesticides through its Agricultural Solutions division, one of five separate chemical segments in the company. The company's pesticide products are primarily aimed at commercial users, with 2011 sales of $5.39 billion. BASF is unique in the group of the top pesticide companies, being the only firm as of July 2016 not actively involved in M&A activities, either as an acquirer or a target.

Monsanto

The St. Louis-based Monsanto Company has been on both sides of the M&A equation, being spurned by Syngenta and turning away two buyout offers from Bayer. After rejecting a second bid from Bayer for $65 billion in July 2016, which was offered at a premium of 40% over its market cap of $46.36 billion, Monsanto appeared to remain in play, seeking white knight offers in light of the potential for a hostile takeover by Bayer. The company, which ranks as the largest seed seller in the world, rounds out the five top pesticide companies, with 2011 sales of $3.24 billion.

Pesticide Company Consolidations

Following the Dow/DuPont merger, consolidation among the top pesticide companies remains as the primary theme in the category, as four of the top five have merger agreements in place, made purchase offers or turned down bids. Even BASF, which has avoided M&A activity, has been mentioned as the white knight that may ultimately buy Monsanto. In this environment, consolidation may result in synergies that drive profits to the bottom line, but there are also substantial risks to be considered when only a handful of companies play an integral role in the production of global food supplies.

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