Monsanto Buys Delta and Pine
by Redaktion (comments: 0)
A nightmare is getting true. Monsanto, the king of gentechnology buys two seed companies in the USA. By this way the concern has more possibilities in directing the development in direction gmo.
A long-standing legal dispute from a failed merger eight years ago is coming to an end – Monsanto Co. will pay $ 1.5 billion to purchase Delta and Pine Land Co.. Monsanto chairman Hugh Grant states that this is a business deal first, with the remove of the legal issue as a bonus. He is looking to bring value-added traits and high-quality seed to cotton growers. The acquisition will allow more investment in breeding, giving cotton farmers planting for Delta and Pine Land seed varieties more choices. Tom Jagodinski, president of Delta and Pineland, sees the deal as a chance for a complete platform of innovative seed technologies to their global farmer customer base for the coming years. The deal has been approved by both companies, but Delta and Pine Land shareholders still have to agree. Also, antitrust clearance has to be passed.
Monsanto is one of the world’s largest agricultural products companies, making Roundup, the world’s best-selling herbicide. Delta and Pine Land is a leading cottonseed company, operating the largest and longest running private cottonseed breeding program in the world. This merger makes Monsanto the biggest player in cotton seeds – Delta and Pine Land controls about half of the US cotton seed market.
Bank of America Equity Research analyst Kevin McCarthy states that this deal is helpful for Monsanto to avoid litigation risks, but the costs considering the premium paid over the stock price is high. Shareholders of Delta and Pine Land will receive $ 42 per share in cash which equals to a premium of 16 percent over the last stock’s closing price of $ 36.24.
The first plans to buy the company were in 1998. But Monsanto backed out, initiating a legal dispute. The back-out was due to the Justice Department’s unwillingness to approve the transaction on commercially reasonable terms. Delta and Pine claimed Monsanto did not make a reasonable effort to get antitrust clearance. The case will be dismissed once the merger is complete.
Monsanto informed the Justice Department it will divest the US assets of its Stoneville cottonseed business, if necessary for the approval for the purchase. According to McCarthy, the Justice Department will look closely because if the company is not forced to divest Stoneville, it will control more than three-fifths of the nation's cottonseed business.
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