Aventis zooms in on buyers for Aventis CropScience

Sambit Datta

Mumbai, June 3: The Franco-German life science company, Aventis, is believed to have narrowed down the search for a potential suitor for its agrochem arm — Aventis CropScience.

Reports in the foreign media had earlier said that globally Aventis had sent its CropScience sale proposal to three US firms — Monsanto, DuPont and Dow as well as to Bayer and its arch rival BASF. An exit from the crop sciences and animal feed businesses will allow Aventis to concentrate on its core pharmaceutical business.

Sources close to one of the suitors told The Financial Express: “Aventis is believed to be narrowing its search for potential buyers for its CropScience business. It is also learnt that Monsanto and BASF may be out of the race for the acquisition.”

No official confirmation was, however, available from Monsanto and BASF.

Analysts said that companies interested in the proposed acquisition also announced that they are interested in taking separate parts of Aventis’ units. For example, Bayer would be interested in garden protection and environmental health apart from crop protection.

Analyst felt that this has enhanced chances for Bayer AG. If the deal goes through, Bayer India would be a substantial gainer. According to them, almost 50 per cent of Bayer India’s sales of roughly Rs 638 crore comes from its agrochem business, while Aventis CropScience India boasts of sales of around Rs 400 crore. The combined market share of both the companies would be in the region of 24 per cent, though this does not take into account possible areas of overlap.

In March 2001, Aventis estimated its CorpScience division would be valued at about seven times core earnings before interest, tax, depreciation and amortisation (EBITDA) plus debt of about two billion euros, as per a Reuters report.

However, it has also been reported that Schering, which has a minority stake in Aventis CropScience, said that at seven times EBITDA is too low for a sale or an initial public offering (IPO).

In India, Aventis CropScience (formed by the global merger of Rhone-Poulenc and the Hoechst) group comprises Aventis CropScience India, Bilag India and ProAgro Seeds which are held variously by the overseas parent.

Aventis CropScience India had announced plans to launch new products like Raft (rice herbicide), Rivet (cotton insecticide), Civet (cotton insecticide) and an agricultural tablet for vegetables and cotton, Ezeetab.