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U.S. Permits Monsanto Acquisition of Delta and Pine Land

The U.S. Justice Department said Monsanto's$1.5 billion acquisition of top cotton seed producer Delta and Pine Landwould be allowed, but the companies would have to sell a range of key assets.

The decision comes after months of complaints from competitors, farm groups and consumer representatives that Monsanto's purchase of Delta and Pine, which operates the world's largest commercial cottonseed breeding program, would hobble competition, lead to higher prices and reduce seed options.

The Justice Department said the conditions it was placing on the deal should mitigate those fears and "preserve competition in this important industry."

Some opponents, including Monsanto competitor DuPont , which currently has an alliance with Delta and Pine for herbicide-resistant seed, said the concessions did not go far enough and they may pursue litigation to block the deal.

But Monsanto spokesman Lee Quarles said Monsanto would move to close the acquisition as soon as possible and had agreed to the deal as structured by Justice Department.

"Delta Pine will serve as an upgrade of our cotton seed business, which will allow us to reach more customers," said Quarles. "We believe this acquisition will help facilitate greater innovation in cotton in terms of both breeding and biotech."

Monsanto said it would sell its Stoneville Pedigreed Seed, one of the country's largest cottonseed companies, to Bayer CropScience, a unit of Germany's Bayer AG, for $310 million. It would also sell Bayer some conventional cotton seed lines from Delta and Pine's cotton breeding program.

Monsanto said it also would sell its NexGen cotton seed brand and related business assets to Americot for $6.8 million.

The Justice Department has also said Monsanto must grant licenses for sales of Monsanto's biotech cotton seed traits to competitors.

It ordered that Monsanto offer competitor Syngenta Crop Protection, a unit of Syngenta, the right to buy 43 Delta and Pine cottonseed germplasm lines that contain a Syngenta insect-resistant technology the company had planned to begin marketing as early as 2009.

The combined companies also would have to change some agreements with other cottonseed companies to allow them, without penalty, "to stack non-Monsanto and Monsanto traits and to sell cottonseed that includes non-Monsanto traits," the Justice Department said.

Syngenta spokeswoman Anne Burt said Thursday that the company was still evaluating the Justice Department's remedy but was generally pleased.

"We need more details, but right now it is something that it looks to be in sync with what we are trying to do," said Burt.

DuPont spokesman Doyle Karr said the Justice Department remedy fell short of protecting competition and the company was considering "its options to block the acquisition in the courts."

John Boyd, president of the 80,000-member National Black Farmers Association, said he also was not satisfied by the requirements.

"This is a sad deal for us. We wanted the DOJ to step up to the plate," said Boyd. "Now we producers will be faced with astronomical prices on seeds with Monsanto taking control of the whole industry."

Boyd reiterated Thursday a threat to file a lawsuit to try to block the deal.

Cotton is grown on more than 15 million U.S. acres annually, in 17 states stretching from California to Virginia. Last year, Delta and Pine accounted for about 56% of all the traited cottonseed sold in the United States, with sales topping $417 million, according to Justice Department data.

Delta and Pine already licenses biotech traits from Monsanto, as do many other industry players. According to Justice Department data, more than 96% of the traited cottonseed sold domestically contains Monsanto traits. The biotech seeds provide resistance to herbicides and pests.

This is the second attempted merger between the two companies. They announced a merger in 1998, but it fell through in 1999.

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