Syngenta, the world’s No.1 agribusiness company, is buying Belgian seed firm Devgen for 403 million euros ($522 million), paying a hefty premium to boost its position in rice farming and upgrade research facilities. The world’s top seed companies are racing to develop new technologies that can improve productivity for farmers grappling with increasingly erratic and extreme weather conditions. Devgen’s technology is already raising yields for rice smallholders in India and South East Asia by 20 per cent, and combining it with Syngenta’s would create “significant potential” for further yield increases, Syngenta said. The Swiss group is offering 16 euros per share for Devgen, a 70 per cent premium to its closing price on Thursday, and way above its 10.18 euro peak this year. Syngenta, which has identified rice as one of its eight strategic crops, will also buy all outstanding Devgen warrants. “The race for technology continues and premiums paid are becoming increasingly hard to justify, in our view,” said Vontobel analyst Patrick Rafaisz. “Even though Devgen’s technology portfolio seems compelling and complementary, the payback will take many years and the takeover will hence prove dilutive (to Syngenta’s earnings) in the foreseeable future,” he added, keeping a “hold” rating on the company’s stock. Syngenta shares were up 0.2 per cent at 345.2 Swiss francs, while Devgen’s were up 66 per cent at 15.62 euros. Germany’s BASF said it would buy US crop protection company Becker Underwood for $1 billion, while rival Bayer has said it will invest billions in its pesticides arm CropScience. The deal also gives Syngenta access to Devgen’s RNAi technology, a hot area of science as companies look to control agricultural pests and disease. Monsanto signed an alliance with Alnylam for its RNAi technology in August. RNA interference, or RNAi, is a naturally occurring mechanism used for the regulation of specific genes which scientists are harnessing in a bid to reduce damage to crops. “The RNAi technology is applicable to all crops and insect pests and very complementary to Syngenta’s integrated crop strategy,” said Kepler analyst Bettina Edmondston. In May the two companies signed a crop protection research deal, with Syngenta paying an upfront 22 million euros plus 4.8 million euros a year during the partnership, boosting Devgen’s resources for future seed development. Syngenta said the bid had been recommended by the Devgen board and was supported by several major shareholders holding around 48 per cent of Devgen’s shares. This is Syngenta’s second deal to be announced within a week. On Wednesday it said it would buy US biotech company Pasteuria Bioscience Inc in a deal worth $86 million. Separately on Friday, British scientists shot down a study on declining honeybee populations that triggered a French ban on a pesticide made by Syngenta. “Biopesticides and seeds are flavor of the month,” and “if you don’t have a position in a certain technology, you are going to be locked out,” Anton Ticktin, a partner with the Valence Group investment bank in London, said in a phone interview. “We definitely see there is M&A going forward in this area.” Syngenta management will give an overview of its strategy and outlook to investors and analysts on Sept.24 at a capital markets day to be held in India. Devgen already has a presence in that Asian country, as well as in Indonesia and the Philippines. The deal follows BASF’s announcement yesterday that it plans to buy Becker Underwood Inc. for $1.02 billion as Kurt Bock makes his first major acquisition as chief executive officer with a move into biological seed treatments. Bayer, which this year purchased AgraQuest for $425 million, has “gotten serious” about investing in rice and wheat, Sandra Peterson, head of the Leverkusen, Germany-based company’s crop-protection unit, said in an interview. Syngenta’s offer for Devgen is at a “very attractive and fair price,” and the Swiss company isn’t aware of competing bids, Pisk said.