Question and Answers with TAG & Sexing Technologies – The Story Behind the Deal

Juan Moreno (Co-CEO Sexing Technologies), Maurice Rosenstein (Co-CEO Sexing Technologies), Natalia Rodrigues (Vice-President TAG), Patrice Simard (President TAG)

More and more over recent years we have seen smaller A.I. companies being purchased by larger genetic organizations. Most recently the world’s fastest growing dairy genetics company, Trans America Genetics (TAG), has been acquired by Sexing Technologies (ST) the world leader in sex-sorted semen. (Read more: TAG Acquired by Sexing Technologies) We sat down with the executives of both these organizations to understand the artistry of this deal.

Patrice Simard (President TAG) and wife Natalia Rodrigues (Vice President TAG)

Patrice Simard, President Trans America Genetics

TBV: How did this deal come about?

P.S.: It came about as the result of some discussion we have had over the years. We have known Juan Moreno for quite some time now, even before we launched TAG. We have always been watching and inquiring about what Sexing Technologies has been doing. We always valued Juan as person, as a visionary, for the great work he has been doing, and what he brings to this industry. One discussion leading to another, we started to realize that there were certain synergies between TAG and ST that were very complimentary to one another, and that triggered some deeper discussions.

TBV: How does this affect the TAG brand?

P.S.: It is a mutual feeling that the brand and the name we have been able to develop here at TAG is partly what triggered ST’s interest in acquiring TAG. ST has some very high-quality products, high gTPI and gLPI genomic sires that are comparable, if not better, to the kind of products the TAG brand has been associated with. The plan is to maintain the name, with the addition of by ST at the end, TAG by ST. The name TAG has been well established in many markets and offers a premium brand to the ST offerings. Sexed semen has a broad range of marketplaces, but certainly is prevalent in the premium high index market where TAG has been able to ascertain its brand.

TBV: What changes can people expect as a result of this deal?

P.S.: As a result of this deal breeders can expect a much bigger presence of both companies. TAG has done substantially well for the resources that were available. This arrangement enhances the reach and resources accessible to further build the organization. The philosophy and the ideology behind the selection and the promotion of sires of the two companies are very similar. As a result, there should not be any change in direction, but rather an acceleration of the process. This deal make it possible to do even more of what we have already started. In Canada, that means that we now have access to the entire offering of programs, genetics, and sires from both TAG and ST. Obviously this gives TAG an edge and a much larger portfolio to offer our breeders.

TBV: What changes will there be for current staff?

P.S.: The way the deal was structured permitted us to keep all our team into place. The current staff will keep on driving forward. The whole TAG team is excited and enthusiastic about the possibilities ahead. Through the worldwide TAG network, everyone is very excited by this opportunity.

TBV: What changes will there be for distributors?

P.S.: Nothing changes for our worldwide distribution network. The TAG channels that are in place will continue to grow and develop. Of course with this deal there is the opportunity to improve and expand some of these channels. Certainly in the mid and long term there will be a desire to significantly increase TAG’s reach in new markets, as well as improve on markets where there are some weaknesses. For sure the TAG channels and networks have done very well for the organization. They are almost entirely exclusive to TAG, so now the potential to move a much broader product offering is very exciting for the distributors as well. We expect this greater breadth of product offering to help grow the TAG distribution network.

TBV: Will there continue be TAG sires being sampled?

P.S.: There are still many details that need to be looked at under a microscope in order to make decisions for the long term. As of now, we need to go through a transition period, optimizing logistics, integrating inventories, discussing different types of bulls and their positioning in various markets. Also, there is a need to look at the different philosophies, a mix of cultures and see how TAG can integrate into the ST network. However, one thing for sure there is a lot of great genetics, so it’s never an issue to put an exceptional product offering out in the marketplace. Now the how to and the branding them, and those decisions we still have a lot of work to do to put a comprehensive strategy together.

TBV: What reaction to expect for TAG shareholders?

PS: Well, over the last few months, little details of the ongoing negotiations with ST made it back to different partners, and they have inquired Natalia and I about it. Their reaction has been very positive. They have seen the company they helped to start, grow up before their eyes. Just like a zealous mother looks after her growing child, our partners have been there, supporting us through each step in this maturation process. Most of them have been able to get some financial return through different incentives and programs. Our semen discount program will remain for them, and we are very proud to continue this. We expect them to be pleased with the many great TAG accomplishments. And we certainly hope they will take advantage of their preferred pricing to acquire excellent conventional and sexed semen products to increase their herds’ profitability trough genetics!

Juan Moreno, Co-CEO of Sexing Technologies

TBV: What first caught your attention about TAG?

JM: I have been following TAG since it started. I think the concept was a very very good concept. They made tremendous strides in the marketplace in branding and image and also did a very good job with sourcing bulls. So they had a good lineup of bulls with a strong brand. On top of that they had some great people working with them. Ultimately is always about the people.

TBV: How did this deal come about?

JM: Good questions, well I guess you hear through the rumor mill about changes going on at all different organizations and especially in the marketplace that affect all companies, and we saw an opportunity based on these market changes. I have known Patrice for over 7 years, so we started some conversations, first kind of just scratching the surface and jokingly but then over time those conversations slowly progress and you begin to talk more and more. You never know if it is possible to find a deal that works well for everyone and it can take a long time to reach that point.

TBV: How does this deal benefit Sexing Technologies?

JM: I think it all about trying to make sexed semen available from high genetic value sires in the hands of dairy farmers. TAG had certainly built a network of people who were achieving just that. In addition, there is the ability to greater progeny test sires through the system that TAG had developed was very interesting and will benefit the growth of Sexing Technologies. The lineup of young sires that they have was very impressive, with many top genomic sires. And the staff is young and energetic and a great group of people that see the changes that are occurring in the industry and have a lot of good ideas but have not had the resources to always execute on them, that now they will have that opportunity.

TBV: What will the structure be going forward?

JM: TAG will continue to operate pretty much the way it has operated in the past. I think there are some things that we can add to TAG, most notably sexed semen in their lineup. I addition I think there are certain things that TAG can add to ST, but for the most part it will remain as it has been.

TBV: How will this affect your international distribution?

JM: The network that TAG has built will remain intact. TAG will continue to service their clients the same way they have in the past. If anything now they will have an even great product offering to provide their customers. The addition of sexed semen and more sires offers their clients worldwide even more to get excited about.

TBV: What changes can breeders expect as a result of this deal?

JM: The biggest changes breeders can expect is the addition of sexed semen. TAG did not have sexed semen in their pipeline in the past, so that is the most significant change that breeders can expect. The number two change that most breeders can expect to see is that there will be a greater selection of sires available.

TBV: With many changes recently and ST continuing to grow, can we expect more changes coming soon?

JM: Our primary focus is on the technology side and the ongoing improvement of the technology. So from that aspect you can expect to see continued changes. Our genetics part is not large, we are one of the smallest bull studs in the marketplace, so we are not large in respect to the genetic side of things. The biggest changes to come are in the continued improvements in the technology, in both sexed semen and conventional semen. We are now starting to dedicate many resources to conventional semen improvements as well.

The Bullvine Bottom Line

There is certainly no question that the dairy genetics industry is going through it greatest changes in history. Genomic, IVF, and sexed semen have certainly been major game changers. With these technologies has come changes in how companies operate. As the marketplace has changes, companies have had to react. In the acquisition of TAG, Sexing Technologies continues to be a leader in this changing market. Always looking for ways to move forward ST has been driving change instead of reacting to the action of others. This deal certainly demonstrates that those with technological differentiation are certainly going to be in the driver’s seat going forward.