Monsanto yesterday paid $1.4bn (£745m) to buy a fruit and vegetable seed company and said it would look at the possibility of genetically modifying the produce.
The company is known for its controversial innovations in genetic modifications for crops such as soya beans and corn. Genetically modified crops are flourishing in the US but have caused an outcry elsewhere.
The deal will speed up Monsanto’s move into the seed market and extend its reach further into Europe and Asia, where the company, Seminis, does a large part of its business.
Monsanto, based in Kansas City, Missouri, is buying Seminis from a private equity firm for $1bn in cash and assuming a further $400m in debt.
Monsanto chairman Hugh Grant said the acquisition had been designed to capitalise on the trend toward healthier eating habits, which has driven growth in the fruit and vegetable markets. Seminis supplies more than 3,500 seed varieties to commercial fruit and vegetable growers in 150 countries. Its top sellers are tomatoes, cucumbers and beans.
Monsanto said it would initially pursue the Seminis strategy of developing products with longer shelf lives and less need for agricultural chemicals through conventional advanced breeding techniques. The option of later genetically engineering the seeds though will cause a chill among opponents.
“In the near-to-mid term this is going to be about breeding,” Mr Grant said. “In the long term, there may be an opportunity in biotechnology.”
Monsanto is shifting its work away from the herbicide chemical business, where competition has depressed prices, and further into the seed industry. Its losses narrowed in the first quarter to $40m from $97m a year ago. Revenues in the quarter were 7% higher at $1.1bn. The company has around 14% of the US corn seed market.
The European commission approved the first genetically modified seeds for planting and sale across the continent, including Britain, in September, despite widespread resistance from the public.
The approval was a significant victory for Monsanto, the company behind the 17 varieties of maize seed.
The EU is seeking to expand the biotech market after a six-year moratorium on new genetically modified crops as well as easing a transatlantic trade dispute.
Seminis is currently privately owned, with the majority stake held by funds managed by Fox Paine & Company of San Francisco. Fox Paine bought control from Mexican conglomerate Savia in 2002 for $650m.
“The addition of Seminis will be an excellent fit for our company as global production of vegetables and fruit, and the trend toward healthier diets, has been growing steadily over the past several years,” Mr Grant said. David Teather, The Guardian