Syngenta, the world's No.1 agrobusiness company, is buying Belgian seed firm Devgen for €403 million ($522 million), paying a hefty premium to boost its position in rice and close the gap on seed market leader Monsanto.

The world's top seed companies are racing to develop new technologies that can improve productivity for farmers grappling with increasingly erratic and extreme weather conditions.

Devgen's technology is already raising yields for rice smallholders in India and South East Asia by 20%, and combining it with Syngenta's would create "significant potential" for further yield increases, Syngenta said on Friday.

The Swiss group is offering €16 per share for Devgen, a 70% premium to its closing price on Thursday, and way above its €10.18 peak this year.

Syngenta, which has identified rice as one of its eight strategic crops, will also buy all outstanding Devgen warrants.

"The race for technology continues and premiums paid are becoming increasingly hard to justify, in our view," said Vontobel analyst Patrick Rafaisz.

"Even though Devgen's technology portfolio seems compelling and complementary, the payback will take many years and the takeover will hence prove dilutive (to Syngenta's earnings) in the foreseeable future," he added, keeping a "hold" rating on the company's stock.

Germany's BASF said on Thursday it would buy U.S. crop protection company Becker Underwood for $1 billion, while rival Bayer has said it will invest billions in its pesticides arm CropScience.

Hot technology

The deal also gives Syngenta access to Devgen's RNAi technology, a hot area of science as companies look to control agricultural pests and disease. Monsanto signed an alliance with Alnylam for its RNAi technology in August.

RNA interference, or RNAi, is a naturally occurring mechanism used for the regulation of specific genes which scientists are harnessing in a bid to reduce damage to crops.

"The RNAi technology is applicable to all crops and insect pests and very complementary to Syngenta's integrated crop strategy," said Kepler analyst Bettina Edmondston.

In May the two companies signed a crop protection research deal, with Syngenta paying an upfront €22 million plus €4.8 million a year during the partnership, boosting Devgen's resources for future seed development.

Syngenta said the bid had been recommended by the Devgen board and was supported by several major shareholders holding around 48% of Devgen's shares.

This is Syngenta's second deal to be announced within a week. On Wednesday it said it would buy U.S. biotech company Pasteuria Bioscience in a deal worth $86 million.

Separately on Friday, British scientists shot down a study on declining honeybee populations that triggered a French ban on a pesticide made by Syngenta.