Monsanto Co. has bought Seminis, Inc., Oxnard, Calif., the largest marketer of vegetable and fruit seed in the world. Seminis supplies more than 3,500 seed varieties to commercial fruit and vegetable growers, dealers, distributors and wholesalers in more than 150 countries worldwide.
Monsanto will buy Seminis for $1.4 billion in cash and assumed debt, plus making a performance-based payment of up to $125 million by the end of fiscal year 2007. In its 2004 fiscal year ended September 2004, Seminis reported annual sales of $526 million. The deal is expected to be completed early this year.
"Seminis will continue to operate under its own name, building upon the growth and marketing strategies that have propelled this company to the top of the vegetable and fruit seed industry. I am confident that the advances and innovations we have made during the past 10 years have provided the foundation needed for ongoing growth and will result in new opportunities for Seminis, its employees, customers and stakeholders," said Alfonso Romo, Seminis chairman and chief executive officer.
"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."
"Ten years ago, we established Seminis with the vision of building the world’s market leader in the vegetable and fruit seed industry. Through the support of our management team, we successfully built a research and marketing platform to serve growers, food companies and consumers," said Romo.
Ferrari to lead
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.
"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. 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, according to a Monsanto spokesman.
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.
Monsanto is identified primarily as a biotechnology company, providing insect and herbicide-resistant traits for major farm commodities. Monsanto is a world leader in providing this technology.
Will stir talk
The acquisition of Seminis by Monsanto is sure to cause much talk within the fresh fruit and vegetable industry.
The vegetable industry has tried to distance itself from the controversy swirling around biotechnology and has openly resisted any attempt to introduce biotechnology vegetable varieties because of a fear of a consumer backlash. Roundup-Ready lettuce has been developed, but it has not gone beyond the experimental field trial stage. With no interest to embrace biotechnology, university researchers have stopped evaluating the herbicide resistant lettuce.
However, a spokesman for Monsanto said the cost of biotechnology development will likely preclude any development of biotechnology vegetables in the long term because there is simply not enough market to quickly recoup the $50 million to $100 million it takes to develop a biotech crop. Monsanto is expected to continue to focus its biotechnology efforts on the major commodities like cotton, corn, alfalfa, soybeans and canola.