Mergers and Acquisitions: Implications for Developing countries Carl Pray cpray@sebs.rutgers.edu

Mergers and Acquisitions – Further evolution? Syngenta ChemChina – ChemChina and SinoChem discussing merger into the world’s biggest chemical company worth $120 billion (Reuters, May 23, 2017) DuPont Dow – Divesting DuPont’s pesticides to FMC Monsanto Bayer Will divestitures be required? Cotton seed/biotech business in US?

Impact on biotech research and innovation? R&D expenditure: DuPont–Dow and Monsanto-Bayer likely to decline from pre-merger levels due to cost savings Syngenta–ChemChina: R&D could be more than it would have been if Syngenta had stayed independent (experience with Makhteshim) Small companies and start-ups – big companies &venture capitalists provide money for R&D Innovation? Synergies between DuPont-Dow and Monsanto-Bayer could increase innovation in Asia and Latin America Chinese government could open up market for GM traits but ownership of Syngenta by $120 billion diversified chemical company could reduce agricultural innovation

Impact in China due to purchase of Syngenta by ChemChina Gradual increase of Syngenta sales and research in China Syngenta will be allow to conduct biotech and plant breeding research in China Purchase of Israeli generic pesticide company was followed by increased R&D after purchase Pesticide prices may rise along with quality of pesticides Will expand its market of pesticides and seeds (rice and vegetables) in China GMO sales?

Most impact on Brazilian markets Most impact on Brazilian markets? GM Traits 2015, Concentration increases but prices negotiated.   Soybean Maize Cotton Bean Eucalyptus Monsanto 2 9 6 - Dow 1 4 Syngenta 7 Bayer 5 Basf DuPont 11 Embrapa Futuragene

Brazil Maize Market 1997 % 1999 2012/13 Agroceres (Brazilian) 26   1997 % 1999 2012/13 Agroceres (Brazilian) 26 Cargill Braskalb/Dekalb 8 Monsanto 60 36 Pioneer 14 33 Syngenta 11 10 Dow 5 17 Others 15 4

Brazil Soybean Seed Market

Indian seed market: little impact based on 2013 market

Indian Pesticide Market Shares 2013-14 Market share of MNCs Key MNCs in the market & market share 36% of domestic market sales Bayer (11%); Syngenta(9%); Cheminova(4%); Dow Agro(5%); BASF(3%); Monsanto(2%); Dupont(1%) and Isagro(1%)

Impact on China, India and Brazil Research and innovation of MNCs in these countries Research down – rationalize their global research programs Innovations up if research more efficient Expand markets in developing countries in general? Have to because markets in developed countries are stagnant. Industry structure – more concentration in marketing? more market and political power? High prices?