Johnston could again become the headquarters of a global seed giant, experts say, with Corteva Agriscience’s newly announced decision to split its chemical and seed businesses into two publicly traded companies.
Corteva said Wednesday, Oct. 1, that its board unanimously approved the plan, with the crop protection business called New Corteva and its seed business, SpinCo.
The Indianapolis-based company said both operations will benefit from the split, giving them a “stronger strategic and operational focus.” Corteva said the split is expected to be completed in the second half of 2026, pending board approval and other conditions.
It has not said where the companies will have their headquarters. But Paul Schickler, who was president of the seed operation before it became part of Corteva in 2019, said Wednesday it would make sense for a new seed business to be based in Johnston.
The city was the headquarters for predecessor Pioneer Hi-Bred International until 1999, when chemical giant DuPont purchased it. Corteva retained its labs and production facilities there, naming Johnston one of its two global business centers.
Future U.S. Vice President and Secretary of Agriculture Henry A. Wallace founded Pioneer Hi-Bred Corn Co. in Des Moines nearly 100 years ago, employing 40 acres near Johnston to grow the company’s revolutionary hybrid seed. “It would bring us full circle,” Schickler said. “Pioneer’s plant genetics and everything associated with it is located” in Johnston.
Corteva said Wednesday the separation “will unleash two distinct market leaders, both farmer-centric, both with technology and innovation at their core and both with operating models and capital allocation priorities tailored to support their respective growth outlooks, strategic directions and value propositions.”
With the separation, Corteva said, Board Chairman Greg Page will become New Corteva’s chair and current Corteva CEO Chuck Magro will be CEO of SpinCo, the more lucrative of the two businesses. Full board and management teams of both companies will be announced later, followed by other key information, the company said.
Analysts have said a split would give investors better choices, creating both a leading seed company and leading crop protection firm.
Corteva estimates that SpinCo’s net sales this year will be $9.9 billion, representing 56% of the company’s total. New Corteva’s estimated net sales will be $7.8 billion.
“The seed and crop protection markets have evolved, and as a result, we see the opportunities ahead for both companies diverging — this is the right time to act to stay ahead of the market,” Magro said in a statement.
“This separation will allow both businesses to maximize long-term value creation by focusing on their own priorities,” he said. “As such, we see this separation as the logical next step in their growth trajectory.”
The split also could give the seed business some legal protection from lawsuits, experts have said.
Corteva said its crop protection business, whose products include herbicides, would be responsible for any environmental claims, including pollution linked to PFAS, or “forever chemicals.” The company, along with DuPont and Chemours, are obligated to pay $875 million over 25 years to the state of New Jersey for contamination there.
Johnston mayor: ‘We’re going to pursue it hard… and make it happen’
Local leaders and experts are optimistic that Johnston will be considered for SpinCo’s headquarters. Last year, Corteva said it employs about 3,000 people there and at its satellite seed production and research facilities across Iowa.
“If the company were to split apart, I would expect Johnston and the greater Des Moines area to be a big winner,” Seth Goldstein, a senior Morningstar Research Services analyst, told the Des Moines Register in a September interview.
Johnston Mayor Paula Dierenfeld said Wednesday the city plans to work with state and federal officials to land SpinCo’s headquarters, which could bring 200 to 300 jobs. Sealing the deal likely will require local and state incentives, experts say.
“We believe this creates a great opportunity for us,” Dierenfeld said. “Johnston is a logical place for them to locate their seed business,” especially given the company’s investment since it spun off from DowDuPont.
The business said last year it had pumped $750 million into research in Johnston and Iowa since Dow and DuPont finalized their $130 billion merger in 2017, making it an important piece of the city and state economies.
The Johnston City Council is expected next week to consider providing Corteva with assistance for a $27 million expansion of its research operation, said Dierenfeld, who didn’t have the details about the incentives requested or jobs it would create.
The last time Iowa and Johnston tried to land Corteva headquarters, competing with Indianapolis, “it didn’t happen,” Dierenfeld said. And it took $17 million in city and state incentives to convince DowDuPont to make Johnston Corteva a global business center.
“We’re going to pursue it hard again this time and make it happen,” the mayor said.
A headquarters creates many corporate jobs, said Morningstar’s Goldstein. “A lot of back-office functions that probably reside in Indianapolis today under Corteva could come to Des Moines — things like finance, accounting, IT, that you would need to set up a second public company,” he said.
Critics of the separation have expressed concern that it will weaken the research that has resulted in products like Corteva’s Enlist line, which pairs a weed-killing herbicide with crop seeds bioengineered to resist its effects.
The collaboration between seed and chemical operations has been key to Corteva’s “tremendously strong performance,” Schickler said.
It was those kinds of results that company leaders had in mind when Dow and DuPont merged and split into three companies, including the business that became Corteva, he said. As an independent seed company, SpinCo will be “forced to collaborate, partner or license” for the same technology that’s now being done in house, he said.
Corteva said splitting its business in two would create $80 million to $100 million in “dis-synergies” — or added costs. In its announcement, it left the door open to “abandon the separation or modify or change its terms.”
Magro said in a call with analysts Wednesday there are “benefits to an integrated or technology systems approach, like we have today with Enlist.”
But “the future looks different,” he said. “We believe tomorrow’s systems will be open or multi-sourced licensing agreements with multiple modes of action.
“Farmers will need these systems due to rapidly growing crop resistance and environmental challenges — insects, weeds, disease and so on — presented by changing weather patterns,” Magro said. “In other words, integration is no longer a prerequisite or a predictor of success.
“The facts on the ground have changed such that we believe it may actually constrain long-term value creation,” he said.
Magro called the seed business the world’s best, “a true rare jewel.”
“Pioneer’s century-long track record is unmatched in the industry, thanks in large part to its elite germplasm and century of breeding expertise,” he said.
The “business today already stands apart, especially given the scarcity of genetics players with global reach,” Magro said. “And we’re now taking this a step further to make it the only pure-play global company singularly focused on advanced crop genetics.”
Reuters contributed to this article.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com.
This article originally appeared on Des Moines Register: Could Johnston land seed headquarters with Corteva’s planned split of its businesses?
Reporting by Donnelle Eller, Des Moines Register / Des Moines Register
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