The wave of agribusiness mergers and acquisitions is likely to continue rolling.
After several blockbuster deals that have been announced since December, analysts said the divestitures required to make those tie-ups possible should continue to fuel activity. Strategic buying and participation by private equity players are also expected to play a role.
Yet the prospective consolidation is not without opposition. As more M&A proposals surface across the industry, critics contend that additional activity will lessen competition throughout the sector, and drive up prices for farmers and consumers alike.
"If you look at how the seed and chemical market landscape looks in North America and Europe, it's very difficult to see all of these going ahead without some spinoffs being required," said Ben Isaacson, an analyst at Scotiabank in Toronto.
In the crop chemicals and seeds sectors, M&A activity has been driven largely by low commodity prices and a greater desire to achieve economies of scale, as well as efforts to lower costs and keep margins relatively stable, as farmer incomes remain under pressure.
On the fertilizer side (potash, phosphate and nitrogen), transactions have been driven by companies looking to expand retail distribution or add capacity to boost profits at a time where there's oversupply in fertilizers. It be can cheaper for an established company to buy existing assets, such as a potash mine, than to build them — and in so doing, the buyer can sometimes broaden its geographic presence and make an acquisition additive to earnings.
Activist investors have played a role in the consolidation frenzy by pushing for change and sometimes becoming supporters of deals, such as the proposed $130 billion merger of Dow Chemical and DuPont. Billionaire Nelson Peltz and his Trian Fund Management pushed for change at DuPont, which ultimately led to a deal with Dow Chemical.