St. Louis, Missouri
November 16, 2004
American
Seeds Established through Acquisition of Channel Bio Corp.
Monsanto Company
(NYSE: MON) announced today the formation of American Seeds,
Inc. (ASI), a new holding company established to support
regional seed businesses with capital, genetics and
technology investments. These investments will allow the
operating companies of ASI to more directly connect their
customers to significant innovations in genomics-based
breeding and other new technologies while continuing to
operate autonomously and locally, providing great service to
their customers and building the value of their brands.
“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
branded and licensing 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.”
ASI Acquires Channel Bio Corp.
ASI
announced its first venture today, acquiring Channel Bio
Corp., a leading U.S. seed company based in Kentland,
Indiana.
“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 yesterday 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
approximately 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.
Growth
Opportunities in Channel’s Seed Brands
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.”
Monsanto Company (NYSE: MON) is a leading global
provider of technology-based solutions and agricultural products
that improve farm productivity and food quality. |