Monsanto forms American Seeds, Inc. and buys Channel Bio Corp., a leading US seed company
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Monsanto Forms American Seeds, Inc., An Investment Vehicle For Regional Seed Companies, American Seeds Established through Acquisition of Channel Bio Corp.
http://www.monsanto.com/monsanto/layout/investor/news&events/2004/11-16-04.asp

ST. LOUIS (Nov. 16, 2004) - Monsanto Company (NYSE: MON) announced today the formation of American Seeds, Inc. (ASI), a new holding company established to support regional seed businesses with capital, genetics and technology investments.

These investments will allow the operating companies of ASI to more directly connect their customers to significant innovations in genomics-based breeding and other new technologies while continuing to operate autonomously and locally, providing great service to their customers and building the value of their brands.

"The pace of technological innovation has changed the seed industry and it's clear in conversations with some of our seed-company customers that the needs for capital and technology for growth have accelerated," said Carl Casale, executive vice president for Monsanto.

"In recognizing these needs, we developed ASI as a vehicle to allow regional seed companies to gain faster and better access to capital, genetics and technology while preserving the brands and approaches that their customers know and trust."

ASI is a wholly owned subsidiary, reporting into Monsanto's U.S. Crop Production business along with the company’s existing branded and licensing businesses.

"Within our U.S. business we now have three approaches to the market, each serving unique customers in unique ways," said Kerry Preete, vice president of U.S. Crop Production for Monsanto. 2With ASI providing a strong complement to our existing brands and our licensing approach, these three channels are providing farmers more choices for the newest technology in the distribution channels they rely on."

ASI Acquires Channel Bio Corp.

ASI announced its first venture today, acquiring Channel Bio Corp., a leading U.S. seed company based in Kentland, Indiana.

"We are very pleased to have Channel as an operating subsidiary of ASI," said Casale. "Channel’s management team is highly regarded in the industry – they run one of the most respected, progressive seed companies in the country.

"We view Channel as a cornerstone investment that will give us more opportunity for growth, accelerating the delivery of important technology advances to customers through the terrific relationships, local brands and quality service for which Channel and its management team are known.”

Channel currently owns and manages three successful brands: Crow’s Hybrid Corn Company, Midwest Seed Genetics, Inc. and Wilson Seeds. Since the time of these additions to Channel, seed sales have more than doubled under the entrepreneurial leadership of the Channel management team.

ASI acquired Channel yesterday in a cash transaction for $120 million. With one-time charges associated with the purchase, the transaction is expected to be dilutive to earnings per share (EPS) in fiscal year 2005. However, the transaction does not change the company’s 2005 fiscal year EPS guidance, which is in the range of $2.16 to $2.29 on a reported basis, and $1.77 to $1.90 on an ongoing basis. The acquisition is expected to be accretive in fiscal year 2006.

Channel currently holds approximately 2 percent of the U.S. corn seed market in its three seed brands. Monsanto’s branded seed business – including the DEKALB and Asgrow brands – holds approximately 14 percent of the U.S. corn market. Through its Holden’s/Corn States licensing business, Monsanto provides germplasm and traits to independent seed companies and distributors who reach 35 percent of the market.

Growth Opportunities in Channel's Seed Brands

With Channel's existing portfolio of three leading seed brands, the Channel family of brands will become an autonomous operating company within ASI.

Channel will continue to operate under the direction of its current management. Don Funk, president, and Aline Funk, chief executive officer, will continue to lead Channel’s employees to deliver on the needs of Channel’s customers.

"We recognized that with genomics-based breeding and biotechnology changing the landscape of corn seed for the future, we needed access to additional research-and-development strengths to grow our existing business and to pursue future strategic acquisitions," said Don Funk. "We believe this relationship will allow us to bring technology and genetics to our customers more quickly and still preserve what we do best at Channel – serve our customers with the people and brands they trust."

Monsanto Company (NYSE: MON) is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality.

Cautionary Statements Regarding Forward-Looking Information:

Certain statements contained in this release are “forward-looking statements,” such forward-looking statements may include as statements concerning the company’s anticipated financial results, current and future product performance, regulatory approvals, currency impact, business and financial plans and other non-historical facts. These statements are based on current expectations and currently available information. However, since these statements are based on factors that involve risks and uncertainties, the company’s actual performance and results may differ materially from those described or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, among others: the company’s exposure to various contingencies, including those related to Solutia Inc., litigation, intellectual property, regulatory compliance (including seed quality), environmental contamination and antitrust; fluctuations in exchange rates and other developments related to foreign currencies and economies; increased generic and branded competition for the company’s Roundup herbicide; the accuracy of the company’s estimates and projections, for example, those with respect to product returns and grower use of the company’s products and related distribution inventory levels; the effect of weather conditions and commodity markets on the agriculture business; the success of the company’s research and development activities and the speed with which regulatory authorizations and product launches may be achieved; domestic and foreign social, legal and political developments, especially those relating to agricultural products developed through biotechnology; the company’s ability to successfully market new and existing products in new and existing domestic and international markets; the company’s ability to obtain payment for the products that it sells; the company’s ability to achieve and maintain protection for its intellectual property; the effects of the company’s accounting policies and changes in generally accepted accounting principles; the company’s ability to fund its short-term financing needs; general economic and business conditions; political and economic conditions due to threat of future terrorist activity and related military action; and other risks and factors detailed in the company’s filings with the U.S. Securities and Exchange Commission. Undue reliance should not be placed on these forward-looking statements, which are current only as of the date of this release. The company disclaims any current intention to revise or update any forward-looking statements or any of the factors that may affect actual results, whether as a result of new information, future events or otherwise.

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