Chemical giant The Dow Chemical Company’s (DOW) wholly owned subsidiary Dow AgroSciences LLC, intends to acquire the Prairie Brand Seed brand and marketing assets of Sansgaard Seed Farms Inc. for an undisclosed amount.
In addition to the Prairie Brand, Dow AgroSciences will also acquire the land, buildings and equipment, which would grow under Dow AgroSciences’ seed business while expanding its broad range of product offerings. The transaction is expected to close in the near future.
After the acquisition, Dow AgroSciences will continue to independently market corn and soybean seed under Prairie Brand. All the employees of Prairie Brand Seed will continue in their current roles.
Prairie Brand, along with the other Dow AgroSciences seed brands, will enable Dow AgroSciences to expand its usage of SmartStax corn trait combination and REFUGE ADVANCED powered by SmartStax.
Additionally, Dow AgroSciences’ future innovations, such as ENLIST Weed Control System technologies, will also be available through Prairie Brand.
Recently, Dow reported its first-quarter 2011 results. The company earned $0.82 per share in the first quarter of 2011, ahead of the Zacks Consensus Estimate of $0.67 as well as last year’s $0.43. However, including one-time charges, the company earned $0.54 per share compared with $0.41 in the year-ago quarter.
Quarterly revenues jumped 20% year over year to $14.7 billion and were above the Zacks Consensus Estimate of $13.8 billion. Volume and pricing gains across all business segments and geographical regions, particularly North America and Europe, yielded healthy revenue growth.
Dow anticipates that demand would improve further, especially in Asia, with the global economic recovery. The US and European markets have also started showing signs of improvement. Dow is also optimistic on major consumer-markets, including electronics, coatings, automotive and packaging. However, construction markets are expected to remain weak.
DOW faces stiff competition from EI DuPont de Nemours & Co. (DD).
Currently, Dow has a short-term (1 to 3 months) Zacks #1 Rank (Strong Buy) but a long- term Neutral recommendation.
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