S&W closes DuPont Pioneer alfalfa acquisition

S&W Seed Company and DuPont Pioneer recently announced the closing of the previously disclosed acquisition by S&W of DuPont Pioneer’s alfalfa production and research facility assets, as well as conventional (non-GMO) alfalfa germplasm, for a purchase price of up to $42 million.

Mark Grewal, chief executive officer of S&W Seed Company, commented, “We are extremely pleased to have completed the acquisition of DuPont Pioneer’s alfalfa seed research and production operations. The combination of S&W’s leading ‘non-dormant’ alfalfa seed capabilities with Pioneer’s leading ‘dormant’ alfalfa seed operations is a natural fit that creates a powerful combination that will permit S&W to become a significant contributor in one of the most compelling opportunities in agriculture – the desire for increased protein in a growing global population. We look forward to capitalizing on the numerous growth opportunities that we believe this acquisition provides.”

Key attributes of the acquisition include:

• The newly acquired alfalfa business is expected to contribute approximately $26 million of incremental revenues during the remainder of fiscal year ’15 ending June 30, 2015 and approximately $40 million of incremental annual revenues in the fiscal year ending June 30, 2016, with annual adjusted EBITDA margins of approximately 14% to 18%;
• Natural product line extension that quickly accelerates S&W’s ‘dormant’ capabilities, nearly doubling the size of the Company’s addressable market;
• 10-year distribution agreement with DuPont Pioneer provides minimum annual purchase commitments and enhanced level of revenue and earnings predictability;
• Major increase in United States sales presence;
• Cross-selling opportunities of acquired varieties with S&W’s existing distributors;
• Expands diversification of S&W’s production capabilities and contracted grower base, with less reliance on any one geographic area for seed production requirements;
• Expanded R&D capabilities create industry-leading alfalfa seed development team with addition of a research facility in Arlington, Wisconsin;
• Adds to seed portfolio over 15 DuPont Pioneer alfalfa seed varieties in the market today and more than 60 varieties that are currently in DuPont Pioneer’s development pipeline, including 6 patented plant varieties and 26 PVP (Plant Variety Protection) registrations in the U.S. and international markets;
• Expands seed cleaning and shipping capabilities with addition of a mill in Nampa, Idaho; and
• Enhances management and technical expertise through the addition of key executive management and employees from the alfalfa group at DuPont Pioneer.