Monsanto Company to Invest in Technologies for Sugarcane With Acquisitions of CanaVialis and Alellyx

Companies to Combine Their Expertise to Enhance Production of Sugarcane and Biofuels to Meet Growing Global Demands

05-Nov-2008 - Brazil

Monsanto Company is investing in a new large-acre row crop, sugarcane, to diversify its existing core crop portfolio and to leverage its experience in bringing innovations to the agricultural marketplace through breeding and biotechnology. Monsanto announced that it has entered into a definitive agreement to acquire Aly Participacoes Ltda., which operates the sugarcane breeding and technology companies, CanaVialis S.A. and Alellyx S.A., both of which are based in Brazil. Monsanto's $290 million (R$616 million) acquisition of Aly Participacoes Ltda. from Votorantim Novos Negocios Ltda. and its sister company, Votorantim Industrial S.A., will be consummated with existing excess cash. Both Votorantim Novos Negocios Ltda. and Votorantim Industrial S.A. are part of the Brazilian industrial conglomerate, Votorantim Participacoes S.A. (commonly referred to as the Votorantim Group). The transaction will be completed as soon as practical.

"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."

Because the acquisition represents a long-term investment in research and development (R&D) and breeding, the company does not expect the acquisition to be accretive to earnings until the middle of the next decade. The company additionally expects a purchase-accounting adjustment for in-process R&D.

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