S&W Seed Co. has acquired certain assets and assigned contracts of U.S.-based sorghum company Chromatin for $26.5 million. The purchase price was set via a stalking horse bid initiated in early September, after Chromatin entered into receivership earlier this year.
Founded in 1980 in Sacramento, California, S&W Seed is a global agricultural company with an eye toward being the world’s leading proprietary seed supplier of forage and specialty crop products that support the increasing global demand for animal proteins and align with consumer shifts toward healthier food options. S&W Seed’s business includes significant R&D, production, and distribution capabilities focusing on alfalfa, sorghum hybrids, sunflower hybrids, and stevia.
“Chromatin originated as an agricultural biotech company that had transitioned to an integrated global sorghum seed company,” said Mark Wong, CEO, S&W Seed Company. “We believe the sorghum hybrids that have been developed to date are some of the best in the industry, with a development pipeline of products that include key traits that are anticipated to be first to market.”
Chromatin has evolved into a pure play sorghum company with a platform that is positioned for growth. Sorghum’s advantage over other crops lies in its ability to produce high-yields under harsh conditions on marginal land, and its wide diversity as a forage, grain, or sweet crop. Highly resistant to heat, drought, water-logging, and lack of fertilizer, the crop is the logical choice for regions that are challenged by food insecurity largely due to poor farmland, adverse climate, lack of inputs, and poor management practices.
However, the grain is also highly desirable in developed markets due to it being gluten-free, and for its uses as an alternative sweetener in alcoholic beverages, an ingredient in animal feed and pet food, and its role in biofuel production.
Between 2018 and 2023, the global sorghum seed market is expected to grow at a CAGR of 4.3 percent, from a value of $2.5 billion in 2017. The crop’s vast versatility and adaptability have driven its rising popularity, and the third largest cereal grain produced in the U.S.
Not only does Chromatin control a diverse portfolio of grain, forage, food grade, and sweet sorghum varieties that address multiple requirements, but also has a world class R&D and testing program that will enable the rapid commercialization of superior products, especially those with recessive traits.
The company also brings a global sales network including representatives in the U.S., distribution through a 500-plus farmer-dealer channel, an expansive network of worldwide distributors, modern and well-maintained production plants, contracted production acreage in Texas, and key product registrations in international markets, including across Europe.
The business has grown in recent years, in part, due to strategic acquisitions and agreements completed in 2016 and 2017. In March 2016, Chromatin announced an agreement with African distributor Zaad to produce and distribute sorghum seed throughout the African continent. A few months later, in June, the company acquired Vega, Texas-based sorghum seed supplier Kirkland Seed – a company with a 16-year track record providing forage sorghum seed to growers and distributors in North America. And in May of last year, Chromatin acquired the global sorghum portfolio of Nidera Seeds – a member of COFCO International.
“In addition to a strong product portfolio, they have established a distribution network of sales representatives, 500+ farmer-dealers, and channel partners that we believe will allow for significant cross selling synergies with our existing alfalfa sales organization,” said Wong. “This is precisely the type of opportunity the management team and board has been seeking to accelerate our go forward strategic plan.”
-Lynda Kiernan