DuPont business Pioneer Hi-Bred, one of the world's leading agricultural businesses, and Pannar Seed (Pty) Limited, a South African-based seed company with operations throughout Africa and other parts of the world, were given approval to implement their agreement for Pioneer to purchase a majority share of Pannar.
The South African Competition Appeal Court announced its approval of the transaction, overturning an earlier decision by the South African Competition Tribunal. Approval is subject to the companies meeting certain conditions and commitments.
The transaction has already been approved by the competition authorities in other African countries where approval was required, including Kenya, Malawi, Namibia, Swaziland, Tanzania and Zambia. Financial terms of the agreement were not disclosed.
"This is good news for our customers, for our employees and for South Africa," said Brian Corbishley, chairperson of Pannar. "Pioneer is the ideal partner for the long-term growth of our business. This is a substantial investment of capital and expertise in South Africa and a vote of confidence in the future potential of agriculture in Africa."
"It's an excellent fit of two seed businesses with similar cultures. Together with Pannar, we can increase investments in innovative products and services for farmers across Africa," said Pioneer President Paul E. Schickler. "This will enhance productivity and improve food security as we utilize the strength of our two businesses to accelerate the development of higher performing products for Africa's farmers."
Approval of the transaction is subject to a number of conditions that Pioneer and Pannar have committed to, including significant, long-term investment in South Africa. In addition to its investment in Pannar, Pioneer has committed R62MM (South African Rand) by 2017 to establish a regional research center in South Africa that would bring advanced R&D breeding technologies to Africa and apply these technologies to the companies' complimentary germplasm pools. The research center will be similar to the innovative centers that DuPont has established in Brazil, India and China and will allow South Africa the opportunity to play a leading role in agricultural development for the African continent.
Pioneer and Pannar have further committed to working with communities, government and other groups to develop programs addressing the challenges faced by small-scale and developing farmers to increase their overall farm productivity, profitability and food security. Pioneer has committed R20MM over six years toward programs, in addition to its current endeavors, that will benefit developing farmers in South Africa.
The merger will allow each business to access additional crop areas, reach more customers and deliver improved seed products quicker and more efficiently than either could have achieved on its own. Pannar receives access to Pioneer's genetics library and its maize breeding and biotechnology capabilities which will benefit its Africa operations and its operations in the United States and Argentina. Pioneer will tap into Pannar's expertise and reach across Africa and its maize genetics developed specifically for the region.
With nearly 80 million acres (32 million hectares) available for maize production, Africa represents a significant opportunity for improved productivity. Average grain yields are less than two tons per hectare, about one-third of what is achieved in other developing regions and only one-fifth of yields in developed countries. In addition, maize seed demand is strong and growing. In South Africa alone, annual hybrid maize seed sales total about U.S. $300 million.
With this partnership, South Africa will become an important center of innovation for Pioneer. Pioneer will therefore have the incentive to invest further in research and development in order to continue to develop the best products for farmers in South Africa and Africa. As the business expands, additional investments in infrastructure and capacity will be driven by increased business success.
This investment is part of the DuPont strategy to deliver innovative solutions for some of the world's most important challenges, including the need for increased food production. Earlier this month in conjunction with the G8 Summit, DuPont committed to the New Alliance for Food Security and Nutrition by announcing an investment of more than U.S. $3 million over the next three years to help smallholder farmers in Ethiopia achieve food security.
DuPont has previously committed to invest U.S. $10 billion globally in research and development dedicated to the food, agriculture and nutrition sectors and advancing 4,000 new products by the end of 2020; supporting training and education opportunities for youth around the world; and working with farmers to improve the livelihoods of families in rural communities.