The South African regulator has blocked the proposed takeover of local seed firm Pannar Seed by chemical giant E I DuPont de Nemours & Co.

In September 2010, DuPont's South African subsidiary Pioneer Hi-Bred had proposed to buy a majority stake in Pannar, the largest seed company in Africa and a significant competitor in the international seed industry.

South African Competition Commission rejected the deal since there were only three companies in the seed business in South Africa, and the deal would have reduced competition between just two firms, including the merged entity.

While making its proposal, Des Moines, Iowa-based Pioneer said the partnership would help it develop genetically engineered crops specifically tailored to different regions of Africa.

With an eye on the approximately 75 million acres (30 million hectares) available for maize production, Pioneer said, ''Africa represents a significant opportunity for improved productivity. Average grain yields are just one ton per hectare, less than one-third of what is achieved in other developing regions and only one-fifth of yields in developed countries.''

In a statement put out yesterday, Pioneer Hi-Bred said that it intends to appeal the decision taken by the South African Competition Commission.

Founded in 1958 in Greytown, South Africa, an agricultural community situated in KwaZulu-Natal, on the eastern seaboard of South Africa, Pannar is in the seed business with operations throughout Africa and internationally.

It has its own seed businesses in nine countries in Africa, including South Africa, and sells through established marketing networks into nine other African countries.

In addition to its extensive research infrastructure in Africa, it also conducts research and commercial activities in the US and Argentina and has a genetics licensing business in Europe.

But this is not the first instance, where South Africa has blocked a deal in recent times. It blocked a $24 billion tie-up between India's leading mobile services provider Bharti Airtel with local telecom company MTN Group on the grounds that MTN would lose its South Africa listing.

It also asked retail giant WalMart to revise its 100 per cent acquisition bid for local retail chain Massmart, which it did, and settled for a controlling stake.