S&W and Corteva in Alfalfa Deal
US crop specialist S&W Seed Company has entered an agreement with Corteva Agriscience, DowDuPont’s Agriculture division, which terminates and replaces a December 2014 contract with Pioneer Hi-Bred International. Part of DuPont since 1999, the company has traded as DuPont Pioneer since July 2012.
In this latest agreement, S&W will receive $45 million in cash at closing plus $25 million to be paid on regularly scheduled dates concluding in February 2021. The Sacramento-based seeds company will retain ownership of all assets originally bought from Pioneer in 2014, including alfalfa varieties and germplasm, R&D capabilities and production facilities.
For its part, Pioneer will receive a fully prepaid exclusive license to produce and distribute certain S&W-owned varieties. It will also receive seed inventory from S&W with a book value of about $25 million and assume certain grower production contract rights and obligations.
Mark Wong, S&W’s president and CEO, commented: “This transaction allows S&W to pursue additional high-value growth opportunities consistent with our objective of building a leading integrated middle market agricultural company.” He added that it “significantly improves our financial position and strategic flexibility at a time when we believe there are a number of attractive potential acquisitions in the seed industry.”
Wong noted that over the past few years S&W has significantly transformed itself from a pure-play alfalfa seed company into a fully integrated, multi-crop company with strong positions in sorghum, sunflower and alfalfa, adding that the deal will allow it to “continue and potentially accelerate” its strategic transformation.