ST. LOUS – Monsanto Co. announced today that it signed a definitive agreement to acquire Oxnard, Calif.-based Seminis, Inc., for $1.4 billion in cash and assumed debt, plus a performance-based payment of up to $125 million payable by the end of fiscal year 2007.
“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,” said Hugh Grant, chairman, president and chief executive officer of Monsanto.
“Seminis is uniquely positioned to capitalize on this fast-growing segment of agriculture, and the acquisition likewise expands Monsanto’s ability to grow. We look forward to furthering the growth and leadership position established by Alfonso Romo and his team as the Seminis business is an important extension to our agricultural seeds platform.”
Seminis is a global leader in the vegetable and fruit seed industry and their brands are among the most recognized in the vegetable-and-fruit segment of agriculture, according to a press announcement issued by Monsanto. It said Seminis supplies more than 3,500 seed varieties to commercial fruit and vegetable growers, dealers, distributors and wholesalers in more than 150 countries.
“Ten years ago, we established Seminis with the vision of building the world’s market leader in the vegetable and fruit seed industry,” said Alfonso Romo, current chairman and chief executive officer of Seminis. “Through the support of our management team, we successfully built a research and marketing platform to serve growers, food companies and consumers.
“I believe Seminis can continue to realize this vision and achieve its full potential as part of Monsanto. We are bringing a complementary technology base and specialized expertise that can not only support economic growth for farmers, but contribute to the health and nutrition of consumers on a global scale.”
Bruno Ferrari, currently the president and chief operating officer of Seminis, will continue to lead Seminis, which is expected to become a wholly-owned subsidiary of Monsanto upon completion of the acquisition. The Seminis business will report into Brett Begemann, executive vice president for Monsanto.
In its 2004 fiscal year, Seminis reported annual sales of $526 million. “This is a strong performing seed business that is generating good returns and has solid growth prospects,” Grant said. “In the medium-term, there is strong potential for the Seminis business to benefit from the breakthroughs our people have made in plant breeding.”
In addition to Seminis’ leading presence in the vegetable and fruit seed industry, which is expected to contribute to Monsanto’s financial results in the near-term, Monsanto management sees additional benefits longer term, the statement said. From a technology perspective, Monsanto intends to continue on the path taken by Seminis for its business, which is to focus on developing products via advanced breeding techniques.
“Longer term, biotechnology applications could be an option, and will be evaluated in the context of Monsanto’s research-and-development priorities and potential commercial business opportunities,” it said.
The transaction is expected to close in Monsanto’s third-quarter 2005 fiscal year, pending regulatory approvals.
As a result of the pending acquisition, Monsanto reaffirmed its 2005 fiscal-year earnings guidance on an ongoing basis to a range of $1.85 to $2.00 per share, and revised its as-reported guidance to a range of $0.86 to $1.06. Previously, the company expected EPS for the full fiscal year in the range of $1.56 to $1.71 per share on an as-reported basis.
The company also adjusted its free cash flow guidance for fiscal year 2005 to be a use of cash in the range of $750 million after the cost of this transaction. Previously, the company expected free cash flow to be a source of cash in the range of $600 million.
Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. For more information, please visit the company’s web site at www.monsanto.com.
Seminis Vegetable Seeds (www.seminis.com) maintains a worldwide presence and global distribution network that spans 150 countries and territories. The company's products reduce the need for agricultural chemicals, increase crop yield, reduce spoilage, offer longer shelf life, offer better tasting foods and foods with better nutritional content.