Acquisitions by Cargill - Raising stakes for competitors'


While we have grown on folk-lore that shortest way to a man’s heart is through stomach – and drawing a parallel, this saying is increasingly seen to be true in the larger Food Animals segment of our AH Industry. Albeit, only variation is that the future route to leadership in Food Animals may go through “Gut” in monogastrics and largely through “Rumen” in well, Ruminants.

Recent acquisition of Diamond V by Cargill precisely fits into this strategy of strengthening the gut of animals and also of business by betting on “natura”ceuticals and brings focus back on importance of having “nature’s gifts for gut” into one’s portfolio.

We had argued in past of the growing importance and interest of leading companies in phytogenics and why more and more AH companies should be interested in this segment. For a recap of the previous posts on this topic, you may visit:

- AGP Free Farms – opportunity goes abegging

- Phytogenics – strategic opportunity for AH players

Purpose of this new piece is to highlight the added competition for leading AH companies as novel feed supplements portfolio becomes latest red hot topic in AH industry.

Acquisition of Diamond V by Cargill is a surprise additional dimension in so far as widely believed to be a 2-sided race – with only animal feed supplements and leading animal therapeutic companies vying for the prized assets. Entry of a commodities and full fledged animal feed producer such as Cargill only signals the urgency in “future securing portfolios” and could speed up further consolidation in this fast pace segment thus leading to increased competition for assets.

In the interim and before this piece could get published, Cargill has proceeded to strengthen its position in Brazil by announcing an acquisition of a leading animal feed premixes manufacturer which further corroborates our emphasis on importance of feed supplements in Food Animals as a new growth opportunity.

Going forward, specialty players in novel animal feed supplements with disruptive ideas may witness heightened interest and may command significant premium for intellectual property on account of the following:

Premium for novel product ideas

As animal feed supplements gained increased acceptance and witnessed quick success, segment continues to attract intellectuals to try newer ideas - both in ingredients as well as application technologies. More and more human as well as financial capital is now deployed in this segment with promising prospects for early bettors.

AH Industry has already witnessed many a new concepts from feed supplement companies with some of them being very successful – and in turn getting acquired by biggies such as Kemin, Alltech, Cargill & DSM to name a few

Scramble among Suitors

Most of the deals in the animal feed supplements space have so far been intra-segmental i.e. acquirers have largely been from same animal feed supplements segment only. However, recent Cargill deal highlights the increased interest from players from other segments of AH industry and also portends the slow but steady move towards our favorite “Total Animal Health” concept. Going forward, AH industry players will have to negotiate increased competition for prized assets

As the saying goes – if the bride is beautiful, suitors will line up. While specialty animal feed supplement companies focus on introducing new ideas and novel applications and demonstrate field efficacies, matchmaking process would only gather pace in future.

Watch out this space for more!

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