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Monsanto forms seed subsidiary
ST. LOUIS (DTN)--Monsanto Company announced Nov. 16 the formation of American Seeds, Inc. (ASI), a new holding company established to support regional seed businesses with capital, genetics and technology investments, according to a Monsanto news release.
"The pace of technological innovation has changed the seed industry and it's clear in conversations with some of our seed-company customers that the needs for capital and technology for growth have accelerated," said Carl Casale, executive vice president for Monsanto. "In recognizing these needs, we developed ASI as a vehicle to allow regional seed companies to gain faster and better access to capital, genetics and technology while preserving the brands and approaches that their customers know and trust."
ASI is a wholly owned subsidiary, reporting into Monsanto's U.S. Crop Production business along with the company's existing businesses.
"Within our U.S. business we now have three approaches to the market, each serving unique customers in unique ways," said Kerry Preete, vice president of U.S. Crop Production for Monsanto. "With ASI providing a strong complement to our existing brands and our licensing approach, these three channels are providing farmers more choices for the newest technology in the distribution channels they rely on."
Getting a fast start, ASI acquired Channel Bio Corp., a leading U.S. seed company based in Kentland, Ind., it was announced Nov. 16.
"We are very pleased to have Channel as an operating subsidiary of ASI," said Casale. "Channel's management team is highly regarded in the industry--they run one of the most respected, progressive seed companies in the country.
"We view Channel as a cornerstone investment that will give us more opportunity for growth, accelerating the delivery of important technology advances to customers through the terrific relationships, local brands and quality service for which Channel and its management team are known."
Channel currently owns and manages three successful brands: Crow's Hybrid Corn Company, Midwest Seed Genetics, Inc. and Wilson Seeds. Since the time of these additions to Channel, seed sales have more than doubled under the entrepreneurial leadership of the Channel management team.
ASI acquired Channel Nov. 15 in a cash transaction for $120 million. With one-time charges associated with the purchase, the transaction is expected to be dilutive to earnings per share (EPS) in fiscal year 2005. However, the transaction does not change the company's 2005 fiscal year EPS guidance, which is in the range of $2.16 to $2.29 on a reported basis, and $1.77 to $1.90 on an ongoing basis. The acquisition is expected to be accretive in fiscal year 2006.
Channel currently holds approximately 2 percent of the U.S. corn seed market in its three seed brands. Monsanto's branded seed business--including the DEKALB and Asgrow brands--holds about 14 percent of the U.S. corn market. Through its Holden's/Corn States licensing business, Monsanto provides germplasm and traits to independent seed companies and distributors who reach 35 percent of the market.
With Channel's existing portfolio of three leading seed brands, the Channel family of brands will become an autonomous operating company within ASI.
Channel will continue to operate under the direction of its current management. Don Funk, president, and Aline Funk, chief executive officer, will continue to lead Channel's employees to deliver on the needs of Channel's customers.
"We recognized that with genomics-based breeding and biotechnology changing the landscape of corn seed for the future, we needed access to additional research-and-development strengths to grow our existing business and to pursue future strategic acquisitions," said Don Funk. "We believe this relationship will allow us to bring technology and genetics to our customers more quickly and still preserve what we do best at Channel--serve our customers with the people and brands they trust."
Date: 11/19/04
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