Monsanto Company : Monsanto To Buy Planting Technology Company, Unveils New Platform
05/23/2012| 10:34am US/Eastern
--Monsanto to buy precision agriculture company for up to $250 million
--Company unveils new pest-control platform
--Part of effort to diversify beyond seed production
(Adds detail, executive comment, updates share price.)
By Ian Berry
Monsanto Co. (MON) is buying a planting technology company, part of an increased effort to expand its focus beyond seed production.
Monsanto announced it will buy Precision Planting Inc., based in Tremont, Ill., for up to $250 million. Precision Planting makes technologies designed to help farmers improve seed spacing, depth and root systems in their fields.
St. Louis-based Monsanto, whose business revolves around breeding and genetically modifying corn and soybean seeds, has said agronomic practices are also crucial to increasing crop yields. The acquisition announced Wednesday will become part of Monsanto's "Integrated Farming Systems" unit, which was unveiled in January.
The deal highlights the company's effort to maximize yield while limiting crop inputs, such as fertilizer, said Robb Fraley, Monsanto's chief technology officer.
"This company is all about driving crop yields," Fraley told investors in a Wednesday presentation.
Wednesday's acquisition is part of a growing effort to position Monsanto in "precision agriculture," an increasingly important business for farmers. Precision agriculture uses computer technology and the global positioning system to ensure that seeds, fertilizer and chemicals are applied correctly.
Monsanto will pay $210 million for Precision Planting, plus a performance-based payment of up to $40 million. The transaction is expected to close this summer.
The company also announced a new "agricultural biologicals" platform in its research and development pipeline.
Monsanto said agricultural biologicals refer to topical or seed treatment products that are produced from natural materials. These products complement or replace existing agricultural chemicals, and are a growing market, with sales of roughly $1.7 billion per year, Fraley said.
Among the products under development, Fraley said, is a spray that would target herbicide resistant weeds, which have become a growing problem in the Midwest in recent years. The spray would disable the mechanism in weeds that allows them to survive applications of glyphosate, Monsanto's key herbicide, Fraley said.
Monsanto shares were recently down 1.4% to $70.30.
--By Ian Berry, Dow Jones Newswires; 312-750-4072; firstname.lastname@example.org; Twitter: @enberry