Replies to post #29 on The Global Demographic Tailwind

[Democritus_of_Abdera]

Re: MON possible exit from the Roundup business....

Dew, regarding your statement and implied prediction in #msg-39687555

MON also has a catalyst for a higher share price that is likely to be realized in the next 12-18 months and has been all but ignored by Wall Street. This catalyst does not require the cooperation of another company nor does it rely on an improvement in the global economy.

....which was that MON may isolate the Roundup Biz, as detailed by exwannabe in #msg-39728397, and will probably package it for sale and move it to a non-ongoing business status on the income statement.

I find your suggestion that MON might increase its value by selling (or spinning off) the Roundup division to have merit.... But I am not ready to fully concur until I develop a more comprehensive understanding of the relevant issues .... This will take some time....

But to give a partial answer to your query as to whether I concur with your assessment of a possible divestiture, I find the following talking points relevant:

1. On 6/26/2009 MON filed an 8-K stating that they are creating a separate division for its Roundup and other herbicides business... I find this step consistent with your suggestion.

2. In the past two years, MON has increased its manufacturing capacity for Roundup (i.e. the Luling La plant) and has made investments to increase mining capacity for glyphosate raw materials in Idaho ... this goes counter to the idea that MON is phasing out the Roundup program.

3. MON is developing seed traits for dicamba- and glufosinate-tolerance as well as new formulations of dicamba and acetochlor. .... I think that it would be to MON’s advantage to have control of both the seed and the herbicide business... Thus, to me, this argues against your suggestion.

4. In recent presentations, Hugh Grant, Chairman, President, and CEO of MON has made explicit statements to the effect that the contributions of Roundup to the company’s earnings is rapidly becoming inconsequential due to the rapid growth of the Seeds and Traits franchise. ... For example in the Q&A of the 9/15/2009 presentation at the Credit Suisse Conference Hugh Grant stated

I’m optimistic in what’s beyond ‘12. It’s heavier in Seeds and Traits, Roundup becomes – you know we’re [inaudible] 15% going to 10%, if you go beyond ‘12 and you keep growing at this rate then Roundup becomes a lot less than 10% so the end significance of the chemical franchise is diluted by the continued growth in Seeds and Traits.

... This sentiment supports your suggestion.