September 12, 2007

Monsanto buys Brazil's Agroeste Sementes for US$100 million

Monsanto Co. (MON) said Tuesday (September 11) it has purchased the Brazilian corn-seed company Agroeste Sementes for about US$100 million.

Full financial terms were not disclosed. Monsanto said it paid cash for all of Agroeste's businesses, including its corn-seed brands.

"Agroeste will serve as an important complement to our existing national brand approach in Brazil," said Brett Begemann, Monsanto's executive vice president of global commercial. "The acquisition will allow our companies to provide new and innovative higher-yielding seed offerings through multiple brands and will bolster our genetics platform for the introduction of our trait technologies longer term."

Agroeste focuses on hybrid corn-seed production and serves farmers throughout Brazil. Monsanto said Brazilian farmers planted about 30 million acres of corn in the 2006-07 growing season. The company estimates the hybrid corn seed market at 23 million acres.

Agroeste's corn-seed products are now used on about 10 percent of Brazil's corn acres. Monsanto's corn-seed products sold in Brazil through the DeKalb and Agroceres seed brands are used on nearly one-third of corn acres in Brazil.

Monsanto said the purchase will enhance its existing corn germplasm portfolio. As a result, it believes it will be better able to deliver new higher-yielding seed offerings to Brazilian farmers.

Monsanto has also been buying smaller US seed companies in recent years, increasing the outlets it has to sell directly to farmers. In 2004, Monsanto formed a holding company called American Seeds Inc., or ASI, with the goal of buying up regional seed dealers.

ASI has since snapped up seed dealers like Landec Corporation's Fielder's Choice Direct and Heartland Hybrids.

Monsanto shares rose US$1.16, or 1.6 percent, to US$71.69 in morning trading.