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4-Traders Homepage  >  Equities  >  Nyse  >  Monsanto Company    MON

Delayed Quote. Delayed  - 07/26 10:00:17 pm
106.02 USD   +0.72%
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Monsanto To Buy Planting Technology Co,Unveils New Platform

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05/23/2012 | 09:46pm CEST

--Monsanto to buy precision agriculture company for up to $250 million

--Company unveils new "agricultural biologicals" platform

--Part of effort to diversify beyond seed production

(Adds detail, comment from Monsanto and farmland manager; updates share price.)

    By Ian Berry 

Monsanto Co. (>> Monsanto Company) is paying $210 million for a maker of crop-planting technology as the agribusiness company steps up efforts to diversify beyond seed production.

Monsanto said the acquisition of closely held Precision Planting Inc. will include an additional, performance-based payment of as much as $40 million. Precision Planting, of Tremont, Ill., makes computer hardware and software tools designed to help farmers improve seed spacing, depth and root systems in their fields.

The deal, which is expected to close this summer, is part of Monsanto's foray into a growing field called "precision agriculture," which refers to the use of computer technology and global-positioning systems to help farmers efficiently use seeds, fertilizer and chemicals.

In January, Monsanto unveiled a new Integrated Farming Systems unit focused on precision agriculture to help farmers increase yields.

John Raines, the head of that unit, said in an interview Wednesday that yield increases from such technology could be dramatic over the next decade, with potential increases of "several tens of bushels" per acre for corn. Current U.S. average corn yields are hovering around 150 bushels an acre, while Monsanto has predicted that figure could double by 2030.

Precision Planting, an 18-year-old company started by an Illinois farming family, uses a national database of soil conditions to tailor planting, and it records harvest data, helping farmers understand which strategies work best in different portions of their field. Farmers purchase Precision Planting's computer displays and other electronic systems from seed or tractor dealers, retrofitting it to their tractors.

Precision agriculture is becoming increasingly important for making "more efficient use of the factory, of the land that you are farming," said David Klein, vice president of Soy Capital Ag Services, the biggest farmland manager in Illinois, with 250,000 acres.

Precision Planting has become a global company, Klein said, and could give Monsanto leverage against competing seed companies such as DuPont Co. (DD) and Dow Chemical Co. (>> The Dow Chemical Company).

Precision Planting has patented its key technologies, making large farm-equipment manufacturers such as Deere & Co. (>> Deere & Company) and CNH Global NV (CNH, NHL.FF) dependent on them, he said.

But Raines said Monsanto plans to strengthen existing partnerships with the seed and equipment dealers who sell the equipment, dismissing the prospect that it could become a competitor with big equipment manufacturers.

Monsanto on Wednesday 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 a year, according to Robb Fraley, Monsanto's chief technology officer.

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 14 cents to $71.44. They are up 1.9% year-to-date.

-By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com; Twitter: @enberry

Stocks mentioned in the article : Monsanto Company, The Dow Chemical Company, Deere & Company
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Financials ($)
Sales 2016 13 331 M
EBIT 2016 2 952 M
Net income 2016 1 439 M
Debt 2016 7 489 M
Yield 2016 1,96%
P/E ratio 2016 32,65
P/E ratio 2017 21,47
EV / Sales 2016 4,04x
EV / Sales 2017 3,88x
Capitalization 46 392 M
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Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 113 $
Spread / Average Target 6,3%
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Hugh M. Grant Chairman & Chief Executive Officer
Brett D. Begemann President & Chief Operating Officer
Pierre C. Courduroux Chief Financial Officer & Senior Vice President
Robert T. Fraley Chief Technology Officer & Executive VP
Robert J. Stevens Lead Independent Director
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