Web Exclusive: Mosanto Acquires Sugarcane Co

Hmm, Give Me Sugar! Monsanto Acquires Brazilian Sugarcane Company
By R. Brown, Web Exclusive Posted Nov. 04, 2008
Monsanto (NYSE: MON), in a news release yesterday, announced the acquisition of Brazilian sugarcane company, Aly Participacoes Ltda., the parent company for sugarcane breeding and biotechnology companies, CanaVialis S.A and Alellyx S.A.

The $290 million price tag will be paid from Monsanto’s cash reserve. Monsanto, in this deal, is looking to diversify is portfolio of crops and apply its biotechnology expertise in the breeding of sugarcane to meet the growing global demand for food and ethanol.

Monsanto in its press release said, “Global demands for raw sugar and biofuels are beginning to rise at a faster pace than the current production levels in sugarcane, a crop that is essential to meeting these demands," said Carl Casale, executive vice president of global strategy and operations for Monsanto. "Similar to our work with technology collaborators, we expect the additions of CanaVialis and Alellyx will allow us to combine our breeding expertise with key large-acre crops with their breeding expertise in sugarcane. Our goal with this approach is to increase yields in sugarcane while reducing the amount of resources needed for this crop's cultivation, just as we're doing now for corn, soybeans and cotton. We view this as a significant opportunity over the longer term to supplement our ongoing commitment to corn as an ethanol feedstock, diversify our crop technology portfolio and provide innovations to such a vital crop as sugarcane.”

Fernando Reinach, executive director of Votorantim Novos Negocios, the parent company of Aly Participacoes Ltda., sees the acquisition as an opportunity for synergies arising from the technological expertise of both companies, saying, “Monsanto's expertise in advanced breeding and trait development combined with CanaVialis' and Alellyx's knowledge of the genetics of sugarcane will help growers to substantially increase productivity in a shorter period of time.”

Although Monsanto expects some short term benefits from the acquisition due to increasing global demand for sugarcane, the company emphasized the acquisition was a R&D investment for the long term and do not expect a resulting earnings boost until about 2015.

For more information, visit Monsanto’s website: www.monsanto.com/investors