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ZURICH -- As Novartis AG and AstraZeneca PLC step up preparations for the spinoff and merger of their agribusiness divisions, company officials are outlining aggressive new strategies to work with farmers and retailers but aren't promising investors a quick fix to problems besetting the beleaguered industry.

"We're still very cautious," says Heinz Imhof, head of Novartis's agribusiness unit and chairman designate of the new combined company, to be called Syngenta AG. "Agricultural commodity prices haven't improved and we don't think there will be a significant upturn in the next 12 months," he adds.

The projected annual cost savings of $525 million from the planned merger would help Syngenta bridge the trans-Atlantic farming slump until a recovery arrives, analysts say. Moreover, a broad array of cutting-edge technologies -- combined with deep pockets -- would give the new company a head start in forging innovative strategic links with growers and retailers.

Industry in Flux

Meanwhile, Syngenta's competitors also are undergoing transitions. Pharmacia Corp. of Peapack, N.J., has unveiled plans to sell 14% of its Monsanto agribusiness unit in a public offering potentially valued at as much as $875 million. At the same time, French life-sciences giant Aventis SA is reviewing the prospects of its crop-protection division.

Combinations among agribusiness companies reflect the need for ever-bigger research budgets -- especially because of a revolution in genetically modified seeds -- as well as a response to the emergence of bigger, more-powerful customers as consolidation also sweeps the food and feed-distribution chains.

Novartis, a Swiss company, and AstraZeneca, of the United Kingdom, kicked off the restructuring spree late last year by announcing plans to create Syngenta, a company that would become the world's biggest agribusiness group, with annual sales of about $8 billion. Analysts estimate the company's valuation could approach $20 billion once it gains independence and its own stock-market listing. Documents outlining the complex Syngenta transaction will be mailed to shareholders Monday and the new company expects to begin operations in November, pending divestment of certain overlapping product lines and final clearance from U.S. and European antitrust authorities.

In an interview Friday, Mr. Imhof avoided detailed discussions of the proposed merger or financial prospects for Syngenta pending presentations in upcoming road shows on both sides of the Atlantic. He disclosed that Novartis is in the final stages of negotiations with potential purchasers of the company's Flint fungicide business and certain other herbicide and fungicide products. The European Commission gave the Syngenta merger conditional approval in July, pending sale of those operations. The merger plan also remains subject to approval from the two companies' shareholders, which Novartis and AstraZeneca will seek at special general meetings early next month.

Marketing Revolution

Amid the sector's turmoil, a marketing revolution also is brewing. Mr. Imhof says Syngenta will intensify efforts to form pacts with growers whereby the company guarantees yields from combinations of Novartis seeds and crop-protection products. A pilot program with citrus-fruit growers in Florida uses the Internet to transmit updates on weather, plant growth and insect conditions to Novartis advisers, who use the data to fine-tune crop-protection prescriptions.

Mr. Imhof is even more upbeat about "closed loop" accords in which Syngenta would act as a general contractor for retailers or food processers. In that model, Syngenta would recruit growers and establish detailed protocols stipulating everything from color and taste of crops or vegetables and special properties desired for successful transport over long distances, to guarantees on maximum residue levels from pesticides.

Such protocols would allow retailers to document the quality of processed foods or produce which in turn could command premium prices. "It would give retailers complete control of what arrives in shops in Britain or Germany -- 'traceability' is the key concept here," Mr. Imhof says. "We're discussing protocol deals with several major retailers in Europe and the U.S., and the first big deal will be announced next year," he adds.

Write to Stephen D. Moore at