Corteva plans to split seed and pesticide businesses

Agriculture company Corteva (CTVA) is considering a split that would split its seed and pesticide businesses into two separate companies, the Wall Street Journal reports.

Corteva itself was spun off from chemical conglomerate DowDuPont in 2019. Its stock price has risen nearly 150% since then, including more than 25% this year. Its market value this year is about $50 billion.

The company supplies farmers who grow grains and oilseeds from soybeans in Iowa to corn in Brazil with chemicals to control weeds and pests, as well as biotech seeds that can fight them.

Corteva and its main agricultural rival Bayer sell about 70% of all corn and soybean seeds planted in the U.S. Investors consider Corteva one of the best-performing companies in U.S. agriculture, in part because of the success of its Enlist brand of soybean seeds, which make up a large portion of the U.S. market.

Splitting Corteva’s crop seed business away from its pesticide business could help protect the company’s seeds from any potential future liabilities related to its pest and weed control chemicals. It’s an issue that has long dogged Bayer. Claims that Bayer’s Roundup, the world’s most popular herbicide, causes cancer have cost the company billions of dollars in litigation and weighed on its stock price. Bayer maintains that its product is safe.

Corteva has not faced the same legal pressure as Bayer and is not involved in the litigation, but experts see no other reason to split the company.

Tags: seeds