The Rising Influence of Rising Affluence

[DewDiligence]

Monsanto Acquires Planting-Technology Company for $210M in Cash

[“Precision agriculture” —which loosely means tighter spacing of row crops to increase yield per acre — is a pretty big deal both for seed companies such as MON and equipment companies such as DE.

MON’s two PRs on today’s news are at: http://monsanto.mediaroom.com/2012-05-23-Monsanto-Company-to-Purchase-Planting-Technology-Developer-Precision-Planting-a-Leader-in-Delivering-Yield-Through-Technology and http://monsanto.mediaroom.com/2012-05-23-Monsanto-CTO-Robb-Fraley-Defines-New-Growth-Layers-For-Companys-R-D-Pipeline . Webcast slides are at: http://www.monsanto.com/investors/Documents/2012/FINAL_%20Robb_GS%2005-23-12_NoNotes_modified_Manny.pdf .]

http://online.wsj.com/article/SB10001424052702304707604577422162132896528.html

›May 23, 2012, 11:17 a.m. ET
By IAN BERRY

Monsanto Co. is buying a planting-technology company, Precision Planting Inc., part of an increased effort to expand its focus beyond seed production.

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. Precision Planting, based in Tremont, Ill., 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 also are crucial to increasing crop yields.

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.

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. [Many models of combines from such companies as DE already come with high-end GPS systems to ensure greater precision in the planting of row crops.]

The company also announced a new "agricultural biologicals" platform in its research and development pipeline [the subject of the second of the two PRs linked in the prologue of this post].

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, Mr. Fraley said.

Among the products under development, Mr. 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 [Roundup], Monsanto's key herbicide, Mr. Fraley said.‹