By Kim Coghill
Bionova Holding Corp. said it intends to sell its fresh produce business to parent company Savia SA de C.V., and begin concentrating on functional genomics.
Under the new business plan, Oakland, Calif.-based Bionova will become a developer of prototype and commercial crop traits as well as targets for agricultural chemical discovery by industrializing the process of target validation through gene profiling, bioinformatics and expertise in plant biology.
Savia, of Mexico, will pay $48 million for the fresh produce business and will assume all debt and liabilities associated with it, according to a statement released by Bionova. Savia currently owns about 76 percent of Bionova.
Proceeds from the transaction will be used to pay $48 million of the advances made by Savia to Bionova Holding. Through the acquisition, Savia will purchase 100 percent of the shares held by Bionova Holding in Agrobionova SA de C.V., a Mexican subsidiary that conducts the company's farming business, and International Produce Holding Co., which owns sales and distribution interests in companies in the U.S. and Canada.
Scott Thenell, Bionova's director of investor relations, said the transaction is subject to approval by stockholders, expected in March or April.
He said Bionova decided to sell the vegetables business because it no longer is essential in the delivery of the benefits of biotechnology.
"We see an opportunity to become a technology provider and an opportunity to unlock value for both downstream customers and our shareholders," Thenell said. "With the explosion of information that has come from genetic sequencing in genomics projects in plant agriculture, we see using model plants to uncover the function of genes. But our expertise will be in validating the utility of those gene leads into a usable trait that can be deployed in commercial agriculture. So it is downstream from the pure gene discovery, but it is upstream from commercial products."
Bionova Holding will pursue discovery and validation of gene leads that deliver resistance to economically important insect and nematode pests and fungal diseases in production agriculture. These novel traits can be licensed for use in elite germplasm in horticultural and agronomic crops.
The company also seeks to provide plant-based technology to improve nutrition and health-promoting components of foods. Also, Bionova Holding anticipates providing technology services, including collaborative or contract research, in support of genetically engineered products, strategies and crop-protection chemical discovery.
Savia will receive newly issued Bionova common stock, or preferred stock that will be converted into common stock, at a valuation of $2.75 per share.
Savia said that it expects Bionova Holding to become financially independent but will fund the company's operating and overhead expenses up to $6 million through Dec. 31, 2001. In exchange for the cash support, Savia will receive common shares at the time of funding.