Arguments continue over both Monsanto's motives in its acquisition of the seed company Seminis Inc. and the merits of the deal.

Prof Joe Cummins suggests that people have focused too heavily in their analysis of motives on the expansion of the GM giant into the fruit and vegetable seed market as a result of the Seminis acquisition, while ignoring or dismissing what Seminis has to offer Monsanto on the GM front.

Prof Cummins considers this a mistake, particularly in relation to Seminis work on GM virus resistant crops for which he lists a series of relevant patents. Prof Cummins points out, "Prior to the Seminis acquisition Monsanto did not have much activity in virus resistance and gains a major input in that area from Seminis." (see item 1 below).

Whatever the motivation, arguments over the wisdom of the deal also continue. Monsanto not only paid approximately $1.4 billion for Seminis but also assumed about $400 million in debt - all this for a company that has a record of substantial losses.

Monsanto's share price has fallen by 6% in response, apparently reflecting investor unease over the high purchase price, plus wariness at Monsanto's growing level of debt.

Fitch Ratings has given Monsanto a high debt rating and warned of a negative financial outlook:

"The transaction is expected to be completed in Monsanto's third fiscal quarter. The [high] debt ratings apply to approximately $1.3 billion of outstanding debt. The Negative Outlook reflects uncertainty regarding timing and the total amount of potential liabilities resulting from Solutia Inc.'s Chapter 11 filing, coupled with the proposed acquisition of Seminis."
http://www.fitchratings.com/

Solutia is Monsanto's old chemical wing which has gone into bankruptcy leaving Monsanto with "environmental and litigation exposures" including further yet to be determined liabilities.

Unlike many of Monsanto's shareholders, however, the pro-GM 'Economist' magazine is determined to view the Serminis deal as "a good move". A close reading of the article, however, reveals a certain amount of uncertainty over just why it is a good move! (item 2)

The piece ends up by declaring that not rushing in to GM may be the real advantage: "given the hassle that Monsanto's present GM crops have met, [a] slow approach may be wise."

1. Prof Joe Cummins on the Seminis deal
2. Lord of the seeds - The Economist
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1. Prof Joe Cummins on the Seminis deal

The newspaper article [quoted in Weekly Watch], like several others, reports that Monsanto has moved into vegetable and fruit seed production with that purchase but ignores the activity of Seminis in GM virus resistant crops. Seminis had been a major player in GM crops for several years.

They own the patent on virus resistant GM papaya along with Cornell University and USDA. Below I include the names of some of the US patents owned or co-owned by Seminis. Prior to the Seminis acquisition Monsanto did not have much activity in virus resistance and gains a major input in that area from Seminis. I think Seminis will gain the major holdings of Monsanto in politicians and government bureaucrats which may speed release of the many virus resistant crops patented by Seminis. I do not know whether the newspaper writers are just ignorant or whether there has been an effort to obfuscate the Monsanto move into virus resistant crops?

Seminis patents:
*Starchless variety of pisum sativum having elevated levels of sucrose
*Plants resistant to WT strains of cucumber mosaic virus
*Transgenic plants expressing DNA constructs containing a plurality of genes to impart virus resistance
*Transgenic plants expressing mutant geminivirus AC1 or C1 genes
*Carbon-based process for selection of transgenic plant cells
*Plants resistant to C strains of cucumber mosaic virus
*Transgenic plants resistant to geminivirus infection
*Papaya ringspot virus NIa protease gene
*Transgenic plants expressing ACC oxidase genes
*Transgenic plants exhibiting heterologous virus resistance
*Papaya ringspot virus replicase gene
*Coat protein gene for the FLA83 W strain of papaya ringspot virus
*Transgenic plants expressing ACC synthase gene
*Potyvirus coat protein genes and plants transformed therewith
*Papaya ringspot virus protease gene
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2.Lord of the seeds
The Economist, Jan 27th 2005
http://www.economist.com/business/displayStory.cfm?story_id=3600040 [subscription]

A good move to buy the world leader in vegetable seeds

MONSANTO, the world leader in genetically modified (GM) grains and oilseeds, is buying a second blade for its plough: California-based Seminis, the leader in vegetable seeds. Seminis made a small loss in 2003-04 and news of the $1.4 billion buy cut Monsanto's share price by 6%. But it may yet prove a smart move.

Seminis brings four benefits. One, a huge range of new crops - almost any vegetable you can name and some that you can't - to join Monsanto's maize, soya and others. Two, an extra $550m-a-year turnover as Monsanto's focus shifts from its $3.2 billion (but slow-growing) herbicide business into seeds and GM, whose $2.35 billion sales in its latest reported 12 months were 24% up on a year earlier. Three, a worldwide network, including a new operations centre in China and a two-year-old one in India, two huge potential markets. Four, a non-GM image.

Seminis was founded in 1994 by Alfonso Romo, a Mexican tycoon, as part of his Savia group. At the time he dreamed of GM, but Seminis made heavy losses, and in 2003 he sold to Fox Paine, an American private-equity firm that is now profitably selling out. Mr Romo's string of acquisitions created a firm that is widely (and wisely) decentralised. Much of its research and sales lies in Europe. Facing European fears and rules, however, Seminis has not tried to push GM there.

Indeed, it sells very little GM anywhere: its many new varieties arise from advanced use of the old technique of cross-pollination. The link with Monsanto, suggests Gillian Turco of Rabobank, a Dutch bank that specialises in agribusiness, might, paradoxically, be exactly what the GM cause needs. Biotechnology does not mean just GM. Give consumers something as unusual as Seminis's mini-watermelon, downsized - but not by GM - to suit one person, not eight, and they may realise they are already in the biotech era, and over time lose their fear of GM.

Well, perhaps, though enemies of GM argue persuasively that Europeans already know very well that their food results from cross-breeding, but still think GM a step too far. Monsanto itself says it will carry on with Seminis's traditional technology, though it might use GM in the longer term. GM farming is spreading rapidly outside Europe, but, given the hassle that Monsanto's present GM crops have met, that slow approach may be wise.

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