Bull breeders move into pigs and prawns with £187m deal

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The Independent Online

The stock market's only bull semen supplier, Genus, is to diversify into pig breeding with the £187m acquisition of Sygen, to create a "world leading animal genetics company".

Genus hopes to introduce its bull semen technology to the pigs business. Sygen also has a prawn breedng business. The companies aim to improve the quality of the animals for the farmers that they supply.

Sygen had been seen as a bid target for the global giant Monsanto, which analysts said may still intervene to break up the Genus transaction. It is understood that Genus and Sygen had been in talks about a merger for some two years but could not agree on management positions.

Genus has decided to buy Sygen with cash, which, at a 37 per cent premium to the share price before the deal talks announcement, could not be turned down by Sygen's directors - they recommended the deal yesterday. The bull group is financing the acquisition through bank debt and a £55m fully underwritten shares placing.

Genus supplies 10 million doses of frozen bull semen every year to farmers across the world. Its prize bulls produce 200,000 doses each. Farmers buy it to fertilise their cows with the superior genes of Genus's bulls. The company runs an £8m-a-year research and development programme to produce the best bulls.

However, pig semen cannot be frozen. Genus developed a technique to strength the membrane wall of the bull semen so it can be frozen without damaging it. If the deal completes, it will now seek to deploy this technology with pig semen.

Sygen breeds animals from superior stock and supplies the actual piglets, sows and boars to the farmers.

"It's a different business model," Genus's chief executive Richard Wood said. "They still have to go through the process of multiplying the animals."

Similarly, with the prawns, a smaller business for Sygen, it breeds better creatures and supplies them in post-larval state, as tiny tadpole-like prawns.

Mr Wood said that, as Genus and Sygen worked with different animals, there was no overlap between customers, so no sales would be lost through the merger. Cost-savings of £6m a year are expected from the deal.

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