7-Business: Delta Pine Land sues Monsanto for $1 billion
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TITLE: Jilted Delta and Pine Land Co. sues Monsanto for $1
billion in "alimony"
SOURCE: The Agrobusiness Examiner, Issue 62, by A. V. Krebs
DATE: January 20, 2000
----------------- archive: http://www.gene.ch/ ------------------
Jilted Delta and Pine Land Co. sues Monsanto for $1 billion in
Genetic engineering's once premiere corporate marriage, which not
only recently ended in acrimonious separation, but failed to give
birth to their sterile progeny --- the terminator seed --- has
now occasioned the rejected partner to announce that it is suing
its one-time suitor for at least $1 billion in "alimony"
The lawsuit suit, filed by Delta and Pine Land Company in the
Bolivar County, Mississippi circuit court contends that the
Monsanto Corp. breached a May 8, 1998, agreement to buy the
cotton seed company by failing to "use commercially reasonable
efforts" to respond to requests from the U.S. Department of
Justice's antitrust division when seeking regulatory clearance
for the merger.
"We regret having to file this lawsuit, but we had no other
choice in order to protect the interests of our company and our
shareholders," Roger Malkin, chairman and chief executive of
Delta Pine, told the New York Times' Carolyn Koo."At the same
time, we will continue to engage in a dialogue with Monsanto and
hope to achieve a resolution that is acceptable to both parties."
After announcing a $27 billion all-stock merger with
pharmaceuticals firm Pharmacia & Upjohn just days before Monsanto
announced on December 20 that it planned to withdraw from the
Delta Pine merger and would pay Delta Pine a $81 million breakup
In responding to the suit Monsanto has noted that "for a year and
a half, we exercised every reasonable effort and a tremendous
amount of time, energy and money to make this merger happen,"
according to Hendrik Verfaillie, Monsanto president. "After
numerous attempts to reach an acceptable compromise with the
Department of Justice, we concluded that the department's demands
made no sense from a business point of view, and that to accept
them would place both Monsanto and Delta and Pine Land at an
unfair competitive disadvantage in the marketplace."
The suit, which will not affect existing contractual
relationships between Monsanto and Delta Pine, came after two
Delta Pine shareholders sued the company's board of directors for
not seeking damages from Monsanto in the aftermath of the
"The main concern for the Delta Pine shareholder is that the
market for the company in the last 20 months has deteriorated
tremendously," analyst Gil Yang of J.P. Morgan pointed out to the
Times. "If they had never locked themselves into an agreement
with Monsanto, they could have been sold to someone else when the
market was more receptive to seed companies. But now the
valuations have deteriorated."
As Koo reports those valuations have deteriorated because the
agricultural-biotechnology sector "has come under pressure from
various environmental organizations in the past year over the
production of genetically modified crops."
"That," Yang adds, "combined with the lack of clear-cut synergies
so far [in the agriculture-biotechnology sector] has created a
situation where pharmaceutical companies prefer to separate
agriculture from pharmaceuticals."
| GENET |
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