Monsanto Drops Planter Equipment Deal With Deere--Update
02 May 2017 - 08:58AM
Dow Jones News
By Jacob Bunge
Seed giant Monsanto Co. terminated a deal to sell its high-tech
crop planter unit to equipment maker Deere & Co. following
pushback from the U.S. Department of Justice.
The two companies announced the deal in November 2015 along with
a data-sharing agreement that aimed to bolster Monsanto's digital
farming unit, the Climate Corp.
The unit is part of Monsanto's wager on the power of data-backed
technology to boost farm yields. For Deere, the deal would have
strengthened high-tech farming implements and services that help
farmers boost efficiency at a time of low crop prices.
Antitrust officials feared the deal would suppress competition
to develop technology that helps farmers plant seeds more quickly
and precisely. The Justice Department sued last year to stop the
deal, estimated at about $190 million. Monsanto and Deere said then
that they would fight official resistance that they called
misguided.
Mike Stern, chief executive of Monsanto's Climate unit, said
Monday that the company had determined there was no path to winning
approval for the deal. "We felt it'd be best to step back and look
for another potential buyer for the business," he said.
He said the transition from the Obama administration to the
Trump administration didn't affect Monsanto's decision.
Deere said the companies were prepared to battle in court for
the deal. "We believe it would have been clear the challenge to the
transaction was based on flawed assessments of the marketplace,"
said John May, Deere's chief information officer.
"The companies' decision to abandon this transaction is a
victory for American farmers and consumers," said Andrew Finch,
acting assistant attorney general in the Justice Department's
antitrust division. Justice officials argued the deal would shrivel
competition that has yielded better prices for farmers
While Monsanto canceled the sale, Deere terminated the related
agreement that would have streamlined the transmission of data from
Deere machines to Climate servers.
The deal's termination is "a bit of a setback for Deere and
probably a tactical victory for CNH Industrial," said Lawrence De
Maria, an analyst for William Blair & Co, referring to Deere's
main competitor in the U.S., CNH Industrial NV.
The Monsanto-Deere deal could have weakened an existing
agreement that allows Climate's system to he installed on CNH-built
planters at the factory, he said. CNH's brands include Case IH and
New Holland.
Bob Tita and Brent Kendall contributed to this article.
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
May 01, 2017 18:43 ET (22:43 GMT)
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