Danisco sells seeds as sugar reform draws close
oil and protein crops in order to focus on sugar beet seed, said
the Danish firm this week, in a move reflecting changes to the
European sugar regime in 2006 that will slice into Danisco's
revenues.
Spinning off its small winter oilseed rape and mustard business to €125 million seed group Svalöf Weibull, Danisco Seed - part of Danisco Sugar - said the decision was 'based on challenges' faced in the firm's main business area, sugar beet seed.
"Danisco Seed will concentrate its efforts on sugar beet seed and strengthen the development, production and sale in order to offset the presumed consequences of the changes. The net book value of the sale will be about DKK 65 million (€8.7m) in the financial year 2004/05," said the €2.2 billion firm.
Danisco indicated last year that proposals to change the 35 year old subsidised sugar regime could lead to a 30 per cent reduction in EU sugar prices and a 10 per cent reduction in beet volumes. Analysts at Goldman Sachs predict that if this scenario occurs, sugar profits for Danisco could drop by as much as 40 per cent.
According to Danisco Seed, part of Danisco Sugar, a long term business plan would have required 'considerable investments in hybrid breeding, modern breeding technology and perhaps acquisitions'. Investments that fall outside of Danisco's core business areas - sugar and ingredients.
Elsewhere, Dutch sugar and ingredients group Royal Cosun that owns inulin maker Sensus made a similar move this week announcing the sale of its 50 per cent stake in the major seed group Advanta that it co-owns with AstraZeneca. In a €400 million deal, both companies will sell their slices to Swiss biotech firm Syngenta, and Fox Paine.
Under terms of the agreement Syngenta will acquire NAFTA's corn and soybean business - traded under the Garst brand - with sales of €135 million in 2003, thereby boosting its market share in US corn to 11 per cent and soybean to 10 per cent. Fox Paine will buy the business outside NAFTA and non-corn, non- soybean business within NAFTA that had sales of €260 million in 2003.
