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Monsanto buys Cargill unit
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June 29, 1998: 10:54 a.m. ET
Gen-engineering giant lands Cargill's seed unit for $1.4 billion in cash
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NEW YORK (CNNfn) - Agricultural products giant Monsanto Co., a powerhouse of genetically engineered crops, announced on Monday it will gobble up the international seed products division of Cargill International Inc. for $1.4 billion in cash.
St. Louis-based Monsanto, which is already on a buyout binge, will get testing, research, and production facilities in 24 countries in Africa, Asia, Europe, and Latin America through the transaction.
The deal with privately held Cargill, of Minneapolis, Minn., also involves sales and distribution facilities in 51 countries, the two companies said.
"The potential for our existing biotechnology traits outside North America is roughly double the acreage potential within North America," said Hendrik Verfaillie, Monsanto's president. "The Cargill international seed businesses give us quicker access to these global markets."
Cargill said it would hold on to its seed operations in North America and Cargill Agricultural Merchants in the United Kingdom.
The sale of Cargill's global seed businesses follows an earlier partnership with Monsanto to make and market biotechnology-enhanced products in grain processing and animal seed markets.
Monsanto and Cargill said they are exploring future opportunities to expand their partnership into other areas of agriculture and food.
Monsanto in May agreed to buy U.S. seed companies DeKalb Genetics Corp and Delta and Pine Land Co. for about $4.4 billion.
Monsanto, analysts said, may be hoping to bulk up before it completes a high-profile $33 billion merger with drug giant American Home Products Inc., which was announced June 1.
"This makes perfect sense from a strategic point of view," said Bill Young, an analyst with Donaldson, Lufkin & Jenrette, who added that the $1.4 billion price tag was "not cheap."
Shares of Monsanto (MTC) were up 5/8 at 57-13/16 in Monday morning trade on the New York Stock Exchange.
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