American Vanguard Buys QPE Herbicides Products From Corteva

American Vanguard Corporation (NYSE:AVD) announced the acquisition of Quizalofop (QPE) herbicides product line from Corteva Agriscience, the Agriculture Division of DowDuPont (NYSE:DWDP) . These products have primary markets in Pulse, Canola and Soybeans across Canada and the United States.

The deal includes purchase of commercial sales information, technical registrations and transfer of existing product supply arrangements. However, financial terms of the transaction have been kept under wraps.

The buyout provides American Vanguard’s crop protection business with a portfolio of herbicide brands holding significant leadership positions in the North American market. These are complementary to the existing glufosinate, glyphosate and 2,4D usage and is highly known for grass and weed control by providing outstanding crop safety and application.

Moreover, DowDuPont Enlist seed trait technology for corn offers crop tolerance to QPE herbicides, which facilitates better weed management. The takeover has granted American Vanguard a license to market QPE for use alone or with Enlist herbicides over-the-top of the new Enlist corn seeds.

These herbicide products have a firm market position with strong profitability. The product suite also aids growth as the Enlist trait technology expands. Following this deal, the company acquired the rights to market in Chile and Argentina, which in turn, strengthens its market access in the South American region.

Shares of American Vanguard have lost 32% over the past six months, underperforming the 12.1% decline of the industry it belongs to.

During third-quarter 2018 earnings call, the company stated that it sees strong sales from its soil fumigants and Equus fungicide as well as from its domestic non-crop and Central America distribution businesses on a year-over-year basis in the fourth quarter.

The company also envisions sustained demand for its products in fruits and vegetables as well as pre-season purchasing demand for its corn products going into the 2019 spring planting season.

American Vanguard Corporation Price and Consensus

Zacks Rank & Stocks to Consider

American Vanguard currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the basic materials space are Verso Corp. (NYSE:VRS) and Ingevity Corp. (NYSE:NGVT) .

Verso has an expected earnings growth rate of 63.5% for 2019 and a Zacks Rank #1 (Strong Buy). The stock has surged 33.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected earnings growth rate of 21.5% for 2019 and a Zacks Rank #2 (Buy). Shares of the company have rallied 8% in a year.

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