St. Louis, Missouri
January 24, 2005
Acquisition expected to add
near-term income growth and diversity to Monsanto’s seed
portfolio
Monsanto Company (NYSE: MON) announced today that it signed
a definitive agreement to acquire
Seminis, Inc., for $1.4
billion in cash and assumed debt, plus a performance-based
payment of up to $125 million payable by the end of fiscal year
2007.
“The addition of Seminis will be
an excellent fit for our company as global production of
vegetables and fruits, and the trend toward healthier diets, has
been growing steadily over the past several years,” said Hugh
Grant, chairman, president and chief executive officer of
Monsanto. “Seminis is uniquely positioned to capitalize on this
fastgrowing segment of agriculture, and the acquisition likewise
expands Monsanto’s ability to grow. We look forward to
furthering the growth and leadership position established by
Alfonso Romo and his team as the Seminis business is an
important extension to our agricultural seeds platform.”
Seminis is the global leader in
the vegetable and fruit seed industry and their brands are among
the most recognized in the vegetable-and-fruit segment of
agriculture. Seminis supplies more than 3,500 seed varieties to
commercial fruit and vegetable growers, dealers, distributors
and wholesalers in more than 150 countries around the world.
“Ten years ago, we established
Seminis with the vision of building the world’s market leader in
the vegetable and fruit seed industry. Through the support of
our management team, we successfully built a research and
marketing platform to serve growers, food companies and
consumers,” said Alfonso Romo, current chairman and chief
executive officer of Seminis. “I believe Seminis can continue to
realize this vision and achieve its full potential as part of
Monsanto. We are bringing a complementary technology base and
specialized
expertise that can not only support economic growth for farmers,
but contribute to the health and nutrition
of consumers on a global scale.”
Bruno Ferrari, currently the
president and chief operating officer of Seminis, will continue
to lead Seminis, which is expected to become a wholly-owned
subsidiary of Monsanto upon completion of the acquisition. The
Seminis business will report into Brett Begemann, executive vice
president for Monsanto.
In its 2004 fiscal year, Seminis
reported annual sales of $526 million. “This is a strong
performing seed business that is generating good returns and has
solid growth prospects,” Grant said. “In the medium-term, there
is strong potential for the Seminis business to benefit from the
breakthroughs our people have made in plant breeding.”
In addition to Seminis’ leading
presence in the vegetable and fruit seed industry, which is
expected to contribute to Monsanto’s financial results in the
near-term, Monsanto management sees additional benefits longer
term. From a technology perspective, Monsanto intends to
continue on the path taken by Seminis for its business, which is
to focus on developing products via advanced breeding
techniques.
Longer term, biotechnology
applications could be an option, and will be evaluated in the
context of Monsanto’s research-and-development priorities and
potential commercial business opportunities.
The acquisition is expected to be
accretive to earnings per share (EPS), cash flow and revenue
growth in fiscal year 2006, its first full year of operation.
The transaction is expected to close in Monsanto’s third-quarter
2005 fiscal year, pending regulatory approvals.
As a result of the pending
acquisition, Monsanto reaffirmed its 2005 fiscal-year earnings
guidance on an ongoing basis to a range of $1.85 to $2.00 per
share, and revised its as-reported guidance to a range of $0.86
to $1.06. Previously, the company expected EPS for the full
fiscal year in the range of $1.56 to $1.71 per share on an
as-reported basis.
The company also adjusted its free
cash flow guidance for fiscal year 2005 to be a use of cash in
the range of $750 million after the cost of this transaction.
Previously, the company expected free cash flow to be a source
of cash in the range of $600 million.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
The
presentations of ongoing earnings per share (EPS) and free
cash flow are not intended to replace net income, cash
flows, financial position or comprehensive income, and they
are not measures of financial performance as determined in
accordance with Generally Accepted Accounting Principles
(GAAP) in the United States. The following tables reconcile
ongoing EPS and free cash flow to the respective most
directly comparable financial measure calculated in
accordance with GAAP.
Reconciliation
of EPS to ongoing EPS: Ongoing EPS is calculated excluding
certain after-tax items which Monsanto does not consider
part of ongoing operations.
Fiscal Year 2005
Target
Diluted Earnings per Share $0.86 - $1.06
Estimated Purchase Accounting Adjustments $0.65 - $0.70
Tax Benefit on Loss from European Wheat and
Barley Business $(0.39)
Solutia-Related Charge $0.68
Diluted Earnings per Share from Ongoing Business $1.85 - $2.00
Reconciliation
of free cash flow: Free cash flow represents the total of
cash flows from operations and investing activities. With
respect to the projected free cash flow guidance for 2005,
Monsanto does not include any estimates or projections of
net cash provided by (required) by financing activities
because in order to prepare any such estimate or projection,
Monsanto would need to rely on market factors and conditions
that are outside of its control.
Fiscal Year 2005
Target (in millions)
Net Cash Provided by Operations $1,050
Net Cash Required by Investing Activities $(1,800)
Free Cash Flow $(750)
Net Cash Provided (Required) by Financing Activities N/A
Net Increase (Decrease) in Cash and Cash Equivalents N/A
Monsanto Company is a leading
global provider of technology-based solutions and agricultural
products that improve farm productivity and food quality.
|
