Monsanto Sells US Sorghum Production Unit and Sets up JV to House Sorghum Breeding Unit in $169.5M Deal

17 Jun 2016 --- Monsanto is setting up a joint venture with Remington Holding Company which will house its sorghum breeding business and is offloading its US sorghum production business to the US private company in deals valued at $169.5m.

The deal comes amid a wave of consolidation in the agribusiness sector and follows just weeks after Monsanto rejected a $62bn bid from German chemicals giant Bayer.

Monsanto said that by setting up the joint venture, called Innovative Seed Solutions, it will be able to drive up a "higher level of investment and innovation" in the grain crop which is used in animal feed and to produce ethanol biofuel.

Innovate Seed Solutions will house Monsanto's global sorghum breeding business including its sorghum germplasm pool, which the joint venture will help grow as its commercial and technology capability will be beefed up, Monsanto said.

Monsanto said it will source sorghum products derived from the joint venture and offer these products through its Asgrow, DEKALB, Channel and regional seed brand dealer networks globally.

The overall value of the sale and joint venture is $169.5m, with Remington paying Monsanto $110.5m.

Remington will hold a 60 percent stake while Monsanto will hold a 40 percent stake in the joint venture, which will be headed up by Monsanto executive Dan Zinck.

“We recognize that our sorghum business has great potential to expand and grow both domestically and internationally,” said Mike Frank, vice president and chief commercial officer of Monsanto.

“We believe by partnering with Remington in the joint venture, we can bring an increased level of focus, investment and resources into this crop space, driving greater stability and value from this business. We remain committed to treating our employees with respect as we work through the necessary approvals for this transaction and next steps with our U.S.-based facilities.”

“Since establishing the Remington business model over 30 years ago, we have had a singular focus on providing the highest level of quality and service to ensure the success of our customers,” said John Overbeck, CEO of Remington.

“We are honored to have this opportunity to enhance our existing relationship with Monsanto and to expand upon our seed service solutions by enhancing the seed industry’s access to elite product offerings.”

It is unclear how the deal will impact Bayer's decision to make an improved offer for Monsanto.