Merger Mania

In a proposed marriage with significant implications for the pest control industry, Hoechst — parent company of AgrEvo Environmental Health — and Rhone-Poulenc announced in December their intent to merge to form the third largest "life sciences" company in the world with more than $45 billion in combined revenues. The new company, called Aventis, will employ more than 95,000 people worldwide, including several thousand in the United States.

AgrEvo is best known among PCOs for its DeltaGard line of synthetic pyrethroid products including Suspend SC, DeltaGard G and DeltaDust. The company also manufacturers the popular Ficam line of insecticides.

Rhone-Poulenc, not particularly well-known in the pest control industry, was expected to grow its market presence with the impending introduction of Termidor, a new termiticide featuring the active ingredient fipronil. Manny Martinez, business manager for the North Carolina-based firm, has spent much of the past year laying the groundwork for the launch of the eagerly anticipated active ingredient that is currently awaiting EPA approval.

While some analysts question the ability of the two organizations to merge their corporate cultures as readily as their financial operations, the marriage should help the two multi-national firms cut costs by as much as $750 million annually, making them more competitive in world markets. There is also some synergy expected to result from the merger of their product lines, particularly as it relates to the pest control industry.

"After the merger, this joint company will have a broader portfolio of active ingredients and branded products than ever before," said Tim Driscoll, president of AgrEvo Environmental Health. "It would also allow us to bring some new chemistry to the pest control marketplace that is going to be complementary to both parties."

Jerry Murphy, president of Cypress Sales and Marketing, which represents several major manufacturers in the pest control industry, agrees. "Rhone-Poulenc was a non-entity in the pest control industry except for the promise of fipronil, while AgrEvo’s product line is dominated by pyrethroids, so it’s a good fit," he said. "It also gives Rhone-Poulenc a ready-made sales force to launch fipronil which is important in this market.

"Pest control is a relationship business," Murphy added, "but building those relationships is a five-year process for most salespeople, so this should speed up the launch of fipronil since they won’t have to worry about hiring a sales force to sell the product."

NPCA Executive Vice President Rob Lederer also views the merger as positive. "I would simply say that certainly a company the size and magnitude of Aventis CropScience can only be good for our industry. AgrEvo is a major player and has been a good player in the industry for a number of years and Rhone-Poulenc — while we have not had an opportunity to experience their product — we are eagerly anticipating it. I’m taking a wait and see attitude, but at this point it looks positive."

What impact is the impending merger likely to have on distribution? It depends on the players, according to Lon Records of Target Specialty Products, Santa Fe Springs, Calif. "If you’ve got two businesses that look at distribution as a complement to their businesses and their marketing plans, then it’s generally a positive thing," he observes. "If they don’t feel strongly about the role of distribution, however, they just kind of reinforce those feelings, either positively or negatively.

"In this instance," Records said, "I think it will be more positive than negative because both AgrEvo and Rhone-Poulenc have felt positively about distribution and I think they’ll work together to ensure their relationship with distributors remains strong."

The proposed merger is expected to be finalized by June of 1999. Until then, both businesses will run as separate entities.