CropScience (BCS), Bayer’s agricultural unit, is planning more purchases of technology and seed licenses in the crops of focus as the German company seeks to keep pace with surging demand for food.
In an official transparency declaration, Devgen’s shareholder Van Herk reported to have bought 285,877 shares last week, for an average purchase price of around € 5.8 per share. According to Factset, Van Herk holds close to 20% of Devgen’s outstanding shares.
Our View:
At the occasion of the announcement of expanding a wheat-breeding research plant in Canada, BCS’s divisional head said they are looking at businesses that fit with the crops the group is focussing on. The crops mentioned in the BCS interview include rapeseed, soybeans, wheat but also rice, the core crop for Devgen. The BCS head said that no mergers of equals in the AG-industry are possible, hence the reason to acquire technology and seed licenses.
The world’s population is expected to increase to more than 9 billion by 2050 and largecap agro-firms anticipate that agricultural production will have to double to foresee the feed and food need.
Conclusion:
We maintain our BUY rating and € 8.3/sh target price.