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Monsanto to acquire seed firm in $1b deal

ST. LOUIS -- Agribusiness Monsanto Co. said yesterday it will buy vegetable and fruit seed company Seminis Inc. for about $1 billion in cash, looking to capitalize on the trend of healthier diets while further migrating from its chemical herbicide business.

Monsanto said it will assume an additional $400 million in debt by Seminis, the Oxnard, Calif.-based supplier of more than 3,500 seed varieties to commercial fruit and vegetable growers, dealers, distributors, and wholesalers in more than 150 countries.

With competition continuing to erode Monsanto's dominance in herbicides, the maker of Roundup has increasingly focused on seeds, including genetically modified offerings able to withstand weeds, insects, and disease seeds, for future profits. The St. Louis-based company already makes the DeKalb and Asgrow brands of seeds.

''The addition of Seminis will be an excellent fit for our company as global production of vegetables and fruits, and the trend toward healthier diets, has been growing steadily over the past several years," Hugh Grant, Monsanto's chairman, president, and chief executive, said in a statement.

Monsanto also said it would make up to $125 million in ''performance-based payments" to Seminis' current owners if Seminis achieved certain revenue-growth targets.

Citing the planned acquisition, Monsanto pared its estimate for fiscal 2005 earnings to 86 cents to $1.06 per share, down from a previous range of $1.56 to $1.71.

Analysts surveyed by Thomson First Call were expecting Monsanto earnings of $2.05 per share.

In trading yesterday on the New York Stock Exchange, Monsanto shares fell $3.62, or 6.3 percent, to close at $54.10. The shares are still near the higher end of their 52-week range of $29.01 to $59.29.

Fulcrum Global Partners analyst Frank Mitsch attributed the slide in Monsanto's stock to the deal's size and the perception that Monsanto may be overpaying.

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