Monsanto to buy cotton-seed maker Delta & Pine for $1.5bn

KANSAS CITY: Monsanto on Tuesday said it agreed to buy Delta and Pine Land, a leading producer and marketer of cotton-plant seeds, for $1.5 bn in cash to expand its product mix.

Under the terms of the deal, Delta and Pine Land shareowners will get $42 a share in cash, a 16% premium over Delta and Pine’s closing stock price on Monday.

Investors reacted to the news by pushing shares higher in early trade Tuesday. Monsanto shares were up 30 cents at $45.47 on the New York Stock Exchange. Delta and Pine Land shares rose 10.3% to $39.96.

Monsanto, which has targeted the cotton industry as a leading growth area, said it plans to finance the deal with cash on hand and a debt offering. The acquisition is expected to boost Monsanto’s earnings per share by the second year after completion of the deal, which is subject to regulatory approval.

“Delta and Pine Land has strong cotton genetics, and we believe Monsanto’s leadership in providing the best cotton traits can improve on this already strong base,” Monsanto chairman Hugh Grant said in a statement.

As part of the deal, Monsanto said it would divest the US assets of its Stoneville cottonseed business if required. Tuesday’s merger announcement comes after the two rivals spent several years locked in litigation over a failed ’99 merger attempt.