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Monsanto sees delay in Delta and Pine Land deal

Reuters/Carey Gillam
January 10, 2007

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Regulatory approval for Monsanto Co.'s planned $1.5 billion acquisition of Delta & Pine Land Co. has been delayed and will likely keep the companies from completing the deal next month as planned, Monsanto officials said in the company's latest regulatory filing.

The initial deadline prescribed in the August merger agreement between the two companies set a Feb. 14 closing date. But Monsanto said in a Jan. 9 filing with the U.S. Securities and Exchange Commission that it anticipates regulatory reviews will require an extension past that date.

The deal with Scott, Miss.-based Delta and Pine Land allows for an automatic extension of up to six months. The agreement also provides for a payment of $600 million from Monsanto to Delta and Pine Land if the deal does not close because of certain issues related to antitrust concerns.

Delta and Pine Land operates the largest private cotton seed breeding program in the world, and would give Monsanto, a global leader in biotech crops, a platform to expand its cotton specialty seeds and genetic traits business.

Delta and Pine Land shareholders approved the merger, which calls for a cash purchase price of $42 per share, on Dec. 21.

But an onslaught of opposition from farm groups and Monsanto competitors, including DuPont and Syngenta AG , has dogged the deal.

"We feel that the proposed merger is clearly anti-competitive," said DuPont spokesman Doyle Karr on Wednesday. "You have a company that controls 95 percent of biotech traits in soybeans, corn and cotton and they would be purchasing a company that has well over 50 percent market share in cotton in the U.S."

Syngenta spokeswoman Anne Burt said the acquisition would harm growers by reducing seed options and competitive pricing.

"Syngenta has been on record... as believing this is not in growers' best interest," Burt said.

Argent Capital Management analyst Thomas Lertiz said the troubles were a "modest negative" that was pressuring Monsanto shares on Wednesday.

In afternoon trading, Monsanto shares were down 40 cents at $49.80 on the New York Stock Exchange.

"You can see some reaction in the stock," said Leritz. "I think it will get through ultimately. But it is a probability bet."

Monsanto said in the SEC filing that it had started identifying potential buyers for the U.S. assets of its Stoneville cottonseed business, but would condition any sale upon the completion of the Delta and Pine Land acquisition.

Monsanto spokeswoman Lori Fisher said the delay was not unexpected and Monsanto was actively working with the U.S. Department of Justice.

Fisher said Monsanto believed it could enhance and improve cotton seed applications to benefit farmers.

Monsanto announced on Wednesday that it was undertaking several initiatives in 2007 to help cotton producers manage risks, ensure fair access to new technology and boost the long-term sustainability of U.S. cotton production.

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