Corteva shares fell more than 4% after a report the Indianapolis agriculture conglomerate was looking to separate its Johnston-based seed business and global crop protection chemical manufacturing stoked concerns about potential operational disruption and value dilution.
The The stock was under $70 a share late in the trading day Monday, Sept. 15. The combined business model has historically delivered strong synergies, including co-development of weed killers and crops resistant to them, as well as bundled solutions for farmers.
The Wall Street Journal, reported on Friday that Corteva was considering a split, said separating the crop-seed unit from its pesticide business could help shield its seeds from any potential future liabilities associated with its pest and weed-killing chemicals. It added that the company is expected to reveal plans soon, barring any last-minute snags.
“If Corteva decides to separate… it would give investors better choices as there would be a pure-play leading seeds company and pure-play leading crop protection firm,” said Morningstar analyst Seth Goldstein.
But Bank of America analyst Matthew DeYoe said Corteva’s potential split of its seed and crop protection businesses lacks clear strategic or financial merit and could weaken both units.
A split could particularly impact the integrated R&D platform that has produced products like Enlist, a soybean strain that can be grown in fields treated with Enlist-branded herbicides that control weed growth.
Separating businesses a wider corporate trend
The seed business generated about 56.5% of Corteva’s total net sales of $16.9 billion last year, while its crop-protection segment, which includes herbicides, fungicides, insecticides, and seed treatments, accounted for 43.5%.
Should it separate its two businesses, Corteva would be joining other major companies like Kraft Heinz, Warner Bros Discovery and Honeywell that have spun off units to boost shareholder returns.
Wolfe Research noted CEO Chuck Magro’s history of pursuing shareholder value but emphasized that a split is not strategically necessary.
Corteva did not immediately respond to a Reuters request for comment on Monday.
The company was formed from the agribusiness division spun off from DowDuPont in 2019, following the 2017 merger of chemical company Dow and DuPont, the owner of Iowa-founded hybrid seed firm Pioneer. It is among the largest U.S. crop protection producers, competing with Syngenta and German firms BASF and Bayer.
Corteva shares had gained about 26% this year, giving the company a market capitalization of about $50.45 billion.
This article originally appeared on Des Moines Register: News of possible split of Corteva chemical and Johnston-based seed businesses drops shares
Reporting by Pooja Menon and Sumit Saha / Des Moines Register
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