Agriculture product giant buys producer and marketer of cotton-plant seeds; views cotton industry as major growth area.
KANSAS CITY, Mo. (Reuters) -- Monsanto said Tuesday that it agreed to buy Delta and Pine Land, a leading producer and marketer of cotton-plant seeds, for $1.5 billion in cash to expand its product mix.
Under the terms of the deal, Delta and Pine Land shareowner's will get $42 a share in cash, a 16 percent premium over Delta and Pine's (Charts) closing stock price Monday.
Monsanto, which has targeted the cotton industry as a leading growth area, said it plans to finance the deal with cash on hand and a debt offering. The acquisition is expected to boost Monsanto's earnings per share by the second year after completion of the deal, which is subject to regulatory approval.
"Delta and Pine Land has strong cotton genetics, and we believe Monsanto's leadership in providing the best cotton traits can improve on this already strong base," Monsanto Chairman Hugh Grant said in a statement.
As part of the deal, Monsanto said it would divest the U.S. assets of its Stoneville cottonseed business if required to close the transaction.
Tuesday's merger announcement comes after the two rivals spent several years locked in litigation over a failed 1999 merger attempt.
Shares of Monsanto (up $0.08 to $45.25, Charts) closed Monday at $45.17 on the New York Stock Exchange.
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