US ingredients companies DuPont and Bunge have unveiled a new joint venture company, called Solae, which they claim will allow them to grow their agriculture and nutrition businesses.
The agreement provides for the joint development of genetically modified (GM) soybeans with "Improved quality traits", as well as the creation of a new business offering a wide range of services to farmers. But the initial focus of Solae will be on the global production and distribution of speciality food ingredients, beginning with soy proteins and lecithins.
DuPont will contribute its Protein Technologies food ingredients business for a majority interest in the joint venture. In exchange for its speciality food ingredients businesses, Bunge will receive a 28 per cent interest in the joint venture plus an estimated $260 million in cash, to be funded by joint venture debt, and will have the right to increase its ownership to 40 per cent based upon a pre-agreed formula. The joint venture's board will be made up of four members, two each from DuPont and Bunge.
The two companies said they expected the initial revenues of Solae to be around $800 million a year. The joint venture is expected to begin operations later this year, assuming a definitive agreement can be reached.
"DuPont is pleased to form this alliance with Bunge," said Charles O. Holliday Jr, DuPont chairman and chief executive officer. "It is an important step in meeting our goals to grow our company in key markets and expand our food and nutrition offerings to better meet customer needs."
"This alliance brings DuPont's strength in science and new product development together with Bunge's strength in the farm-to-consumer food chain," said Alberto Weisser, chairman and CEO of Bunge. "Together, our two companies will be better able to deliver value by linking farmers and consumers worldwide to provide high-quality, nutritious alternatives in the fast growing, value-added foods market."
Solae will allow the two companies to combine their complementary capabilities and assets in the areas of production, sourcing, marketing and distribution, and the broader range of products will enable the joint venture to provide better solutions to customers. There will also be expected efficiency gains.
"This joint venture will provide tremendous growth opportunities by enabling us to compete more broadly in the large protein and functional ingredients markets globally," said J. Erik Fyrwald, vice president and general manager of DuPont Nutrition & Health. "In addition, the complementary strengths of our two companies will allow us to use advanced breeding, production and processing technologies to develop new and improved food ingredients, providing consumers with healthier and great tasting proteins to meet their growing needs worldwide."
Drew Burke, managing director of Bunge's Ingredients and New Business Development divisions, added: "This joint venture creates a premier global ingredients company, with a very competitive product portfolio and manufacturing expertise. Its growth will be driven by the replacement of meat and dairy proteins in a wide range of food applications."
Fyrwald will be chairman of the joint venture and Burke will be vice chairman. Stephan B. Tanda, currently president of DuPont Protein Technologies, will be chief executive officer of Solae.
The biotechnology agreement will combine DuPont's broad strengths in science, including leading positions in plant science and modern biology, with Bunge's capability to transform oilseeds and grains into value-added products for its global customer base in the food and animal feed sectors. Initial focus of the agreement will be on soybeans.
The alliance on production agriculture will focus initially on South America and Asia.