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Re:

Monsanto’s American Seeds Acquired Five Seed Businesses in 2006

Monsanto’s American Seeds acquired two regional seed businesses and agreed to acquire three more in 2006. The reported transaction figures differ in their stated accounting basis.
From TheFinanceBase Team2 min to read
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In June 2006, Monsanto’s American Seeds, Inc. (ASI) acquired two regional seed businesses and agreed to acquire three more, expanding its presence across the central and eastern Corn Belt. Successful Farming reported about $77 million in aggregate cash transactions; Monsanto later reported $73 million net of cash acquired for five additional U.S. seed company acquisitions in June and July 2006. Those figures use different stated bases and are not reconciled in the available accounts.

Which seed companies were involved?

ASI, formed by Monsanto in 2004 as a holding company for regional seed businesses, was the acquiring vehicle. The companies primarily marketed corn and soybeans. Monsanto provided capital, genetics, and technology investment support through ASI, according to Successful Farming’s June 28, 2006 report.

  • Diener Seeds of Reynolds, Indiana
  • Sieben Hybrids of Geneseo, Illinois
  • Kruger Seed Company of Dike, Iowa
  • Trisler Seed Farms of Fairmount, Illinois
  • Campbell Seed’s seed marketing and sales business of Tipton, Indiana

The report characterized the five businesses as serving farmers throughout the central and eastern Corn Belt.

What was the status of each transaction?

The June 28 report distinguished completed acquisitions from agreements to acquire:

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  • ASI had acquired the seed marketing and sales businesses of Diener Seeds and Sieben Hybrids.
  • ASI had entered definitive agreements for Kruger Seed Company, Trisler Seed Farms, and Campbell Seed’s seed marketing and sales business. The report stated July 1, 2006, for those acquisitions.

How much did the acquisitions cost?

Successful Farming reported approximately $77 million in aggregate cash transactions and said individual deal terms were not disclosed. Monsanto’s later Third Quarter 2007 Form 10-Q reported $73 million, net of cash acquired, for five additional U.S. seed company acquisitions in June and July 2006.

Reported amount Source and stated basis
Approximately $77 million Successful Farming, June 28, 2006: aggregate cash transactions; individual deal terms were not disclosed.
$73 million Monsanto, Third Quarter 2007 Form 10-Q: aggregate amount net of cash acquired for five additional U.S. seed company acquisitions in June and July 2006.

The filing does not identify the five companies in the cited passage or explain how its net-of-cash figure relates to Successful Farming’s approximate cash-transaction figure. The amounts therefore should not be treated as directly interchangeable.

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What market share did the five companies represent?

Successful Farming estimated their combined share at approximately 1.4% of total U.S. corn seed sales and 2% of total U.S. soybean seed sales. These are estimates reported in 2006, not current market-share figures.

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