Bayer's pesticides arm Bayer CropScience is to buy California-based firm AgraQuest for US$425 million plus milestone payments to boost its vegetable and fruit protection business.
The purchase of AgraQuest, which breeds fungi-killing bacteria to fight plant disease, will help Bayer CropScience diversify its product range to offer biological pesticides that have a lower risk of resistance development, Bayer said in a statement late on Tuesday.
Resistance is a major problem linked to crop chemicals that occurs when new mutations of weeds, fungi and insects evolve that withstand prevailing pesticides.
The company's product lines in Canada include its biofungicides Rhapsody and three formulations of Serenade, all of which use the company's QST 713 strain of Bacillus subtilis to release various compounds that attack fungal and bacterial pathogens.
Serenade Max and Serenade ASO are registered for use against certain blights, moulds, blots and rots on various fruits, vegetables and against sclerotinia, brown spot and frog eye in soybeans, while Serenade CPB is approved for use against sclerotinia in canola, soybeans and pulses.
Rhapsody is approved for treatment of certain diseases on various hothouse ornamentals, hothouse vegetables and turf crops.
Shares in Bayer were indicated down 0.6 per cent in pre-market trade, according to German broker Lang + Schwarz.
Bayer CEO Marijn Dekkers arrived last year with a reputation for being able to handle transformational takeovers, but the AgraQuest deal is the latest in a line of small and medium-sized acquisitions.
Dekkers has said he will try to boost the group's health care and crop protection and genetically modified seeds business via takeovers.
The U.S. target company's musically-branded product portfolio outside Canada includes Serenade and Rhapsody as well as Sonata and Ballad fungicides and Requiem insecticides.
The head of Bayer CropScience, Sandra Peterson , said the addition of AgraQuest would help the unit serve the growing fruits and vegetables market, which already accounts for more than 25 per cent of the unit's revenues.
"We plan to achieve three billion euros (US$3.78 billion) of sales in this segment by 2020 and with the acquisition of AgraQuest we are underlining our growth ambitions," she said in a statement.
Bayer CropScience is the world's second-largest maker of conventional farming pesticides, after Syngenta, and also makes genetically modified seeds.
-- Reuters, with files from AGCanada.com Network staff