AP News, May 31st, 2007
The Justice Department on Thursday approved Monsanto Co.'s $1.5 billion acquisition of cotton company Delta and Pine Land Co., but required the companies to sell assets related to cottonseed production.
Assistant Attorney General Thomas Barnett said the divestiture is necessary to make sure the merger doesn't quash competition in the U.S. cottonseed market.
"The transaction did represent very significant competition issues," Barnett said during a conference call.
To make the deal possible, Monsanto and Delta created a new cottonseed company that Monsanto will sell to spur competition in the marketplace.
St. Louis-based Monsanto pitched in its Stoneville Pedigreed Seed Company, while Delta added some of its best cottonseed varieties to the new company, Barnett said. When it is purchased, the resulting firm should allow a competitor to develop new lines of genetically engineered cottonseed to compete with Monsanto's, Barnett said.
Monsanto said its competitor, Bayer CropScience, has agreed to buy the Stoneville holdings for $310 million.
The deal must be closed within 150 days and the Department of Justice must approve the buyer. Barnett said Monsanto hadn't informed him yet of its deal with Bayer. If Monsanto can't finalize the deal, it would be forced to unravel its acquisition of Delta, Barnett said.
Critics had attacked the proposed deal in recent months because of its potential anticompetitive effects.
Monsanto is already the world's leading producer of genetically engineered seeds. Many farmers worried it would corner the U.S. cottonseed market with its patented seeds if it acquired Scott, Miss.-based Delta's market share.
Monsanto Chief Executive said the merger will speed the company's development of new seed strains.
"We believe our acquisition of Delta and Pine Land will help us facilitate greater innovation within the cotton industry by accelerating the number of products available to cotton farmers and generating new value for our business," Grant said.
Monsanto first announced plans to buy Delta and Pine Land in 1998, but backed out, prompting a legal dispute that continued until the companies announced a new agreement last August. Monsanto has said the case will be dismissed once the merger is complete.
Shares of Monsanto fell 7 cents to $61.60 Thursday, while shares of Delta & Pine climbed 38 cents to $41.85.
