Monsanto’s Purchase Was Just the Beginning: From Blockbuster to Mega-Blockbuster
March 31, 2009 It was a blockbuster deal from the very beginning — the (relatively) uncomplicated marriage of Monsanto Co., the world’s largest transgenic traits company, and Delta and Pine Land Co. (D&PL), the world’s largest cotton seed company, with some 90% of D&PL’s business being within the U.S.
In 1998, Monsanto began negotiations to buy D&PL for $1.9 billion (USD), but pulled the offer in 2000, fearing regulatory approval would not come. D&PL sued Monsanto, alleging the company had not made a good-faith effort to obtain approval.
In August 2006, Monsanto again announced plans to buy D&PL for $1.5 billion. Upon closure of the deal, Monsanto agreed to divest itself of Stoneville Pedigreed Seed Co. and Stoneville’s NexGen varieties, and D&PL would drop its lawsuit. The U.S. Department of Justice (DOJ) would scrutinize the deal, but approval was expected. The only uncertainty in 2006 was the question of who would wind up with Stoneville.
The DOJ’s preliminary blessing came on May 31, with final approval on June 19. Also coming that day was the announcement that Monsanto’s southern U.S. business will include D&PL brands of cotton and soybeans, as well as Monsanto’s DeKalb corn, Asgrow soybeans and Roundup brand herbicides.
If You Asked, No One Told
With almost unbelievable confidentiality, other players were involved and the deal went from blockbuster to mega-blockbuster for U.S. cotton.
On May 31, here’s what happened, almost in the blink of an eye:
• Monsanto acquired D&PL, with colossal conditions.
• Bayer wound up with Stoneville, although the NexGen varieties were not included. Bayer paid $310 million for Stoneville.
• In a complete surprise to most in the industry, the NexGen varieties, plus specific D&PL germplasm, went to Americot in a $6.8 million deal. This made Americot the second largest seed company in the U.S. Southwest and third largest in the country.
• Syngenta got 43 D&PL seed lines with Syngenta’s VipCot insect resistance trait that D&PL planned to market in 2009.
Opposition to the DOJ’s decision was immediate. In a Wall Street Journal-published report:
Justin Boyd, president of the National Black Farmers Association, said, “(This) is not going to help the American farmer. DOJ is going to let Monsanto shove this deal down our throats.”
DuPont spokesmen Doyle Carr said the merger would limit DuPont’s ability to access and compete in certain markets.
Arkansas chief deputy attorney general Justin Allen said, “Our concern is that this will allow Monsanto … to corner the market on certain biotechnology traits.”
Almost as quickly, Monsanto and D&PL counter-punched.
“A lot of the opposition is corporate-led opposition by DuPont,” said D&PL president and CEO Tom Jagodinski. “And I guess I am surprised by it … It clearly enables Syngenta, clearly boosts the capabilities of Stoneville/Bayer and will help Americot. From my perspective, I think a lot of it, in respect to DuPont, is sour grapes … There is going to be a lot more competition; there is no question about that.”
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