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Valuations show a consistent upward trend

There are several listed companies that are active in flower and plant breeding. Although these activities are often a minor part of their total activities, statistics on their valuations do contain important information for dedicated horticultural breeding companies.

As shown in the above chart, valuations of selected companies have gone up in the past 12 months by 17.0%, partially driven by a fourth consolidation wave in the crop market in which Dow and DuPont, Monsanto and Bayer, ChemChina and Syngenta are merging (pending regulatory approval).

The median enterprise value/EBITDA multiple of the selected peer group is currently 12.7x. The selected peers are typically valued at a higher EBITDA multiple than dedicated horticultural breeding companies, the main reasons being their higher technology standards, large size, stronger distribution power, global reach and product diversification. Oaklins expects well-run platform companies in the horticultural breeding market to reach similar valuations in the near future, with valuations well north of 10x EBITDA.

Maarten Wolleswinkel, Horticulture Specialist, Oaklins: “We see the majority of the horticultural breeding companies being sold valued at EBITDA multiples ranging from 4x for small, focused companies with limited distribution power to 7x for (semi-)global players that are market leaders in a popular variety. The largest players with global activities and a broad product portfolio trend to be valued at multiples closer to those of the companies shown above. The spread between both categories offers opportunity for value creation, another important factor that's driving the current consolidation trend.”

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