If remedies are met, the U.S. Department of Justice will allow the Monsanto/Delta and Pine Land merger to proceed. The purchase of Scott, Miss.-based D&PL has set Monsanto back $1.5 billion, but the ruling biotech company will control D&PL's 50-percent plus share of the Southern cottonseed market (closer to 90 percent in some states).

Among the DOJ's remedies:

Shortly after the DOJ's ruling, representatives from the affected companies spoke with Delta Farm Press.

BAYER

Since opening its cottonseed business a few years ago, Bayer “has done well in Texas,” says Mike Gilbert. “But we've been unable to penetrate, or compete effectively, in the markets east of Texas.”

The Stoneville acquisition means “we're getting a great brand with tremendous germ plasm for the Mid-South,” says the vice president and general manager of global cotton business for Bayer. “And that's also true for parts of the Southeast and the Mid-Atlantic states. Combining Bayer and Stoneville will mean we'll grow share east of the Delta.”

Bayer also has a portfolio of biotech traits in the works.

“LibertyLink Ignite is on the market already. But glyphosate tolerance and insect traits are coming as well as abiotic stress and improved fiber traits. This gives us an opportunity to have a platform to market those traits over a wider range. We have a lot of customers already because we're in the crop protection business. But we didn't have a seed platform until this opportunity came around.”

Once the deal is complete, Bayer will have just under 40 percent of the cottonseed market.

“The deal doesn't include the NexGen franchise, only Stoneville. So we'll increase our share by about 10 percent, based on 2006 numbers. Of course, 2007 is a new game with the big cotton acreage reduction.”

What about the cotton acreage? Does Bayer's growth plan foresee less cotton acreage or a return to former levels?

“Bayer has, for years, taken a long-term view in any business it operates. We think cotton acres will cycle. We've looked at this historically and we think, short-term, the cotton acreage may stay down. But long-term, they should cycle back up. Who knows for sure?”

If the nation's cotton is maintained at about 12 million acres, “the deal still makes sense for us.”

Are there any surprises in the DOJ merger demands? “We've been working on this deal for several months, so we were aware of most of the things laid out in the deal. We knew we weren't going to get NexGen. We did know we'd get some lines from D&PL. We weren't aware of some things, like how much germplasm Syngenta might get from D&PL.”

Following the merger and side-deals, U.S. cotton farmers “should be excited about more varieties coming quicker, about more investment in breeding programs to provide better varieties, about more investment in biotech trait developments.”

MONSANTO

Monsanto purchased D&PL on June 1, a day after the DOJ decision was announced.

“On (June 1), we got clearance from a judge to go ahead and purchase D&PL, but they'd remain separate from Monsanto,” says Andrew Burchett, Monsanto spokesperson. “That means the financial transaction took place, but D&PL is still running itself with no input from Monsanto. They're operating independently and that will continue until we make the divestitures.

“Bayer has agreed to purchase Stoneville, and that has to be approved by the DOJ before the transaction can be completed. Likewise, Americot has agreed to purchase NexGen.”

Toward a goal of finalizing the deal, Burchett says, several things are expected soon. “First, the DOJ has to review the proposed buyers of Stoneville and NexGen. When they say, ‘We approve,’ we'll go ahead and make those transactions. At that point, we'll be divested and can go ahead and integrate with D&PL.”

Asked about the role state attorneys general might play in the process, Burchett says they were a part of the merger's vetting. The merger “was struck between Monsanto and the DOJ. But all the attorneys general who had expressed an interest had an opportunity to work with the DOJ on the terms. In fact, the DOJ came to those terms based, at least in part, on interactions with the attorneys general.”

Was the agreement what Monsanto expected? “For the consent decree to have been filed, both Monsanto and the DOJ had to sign off. So, we were aware of the terms and think they address the DOJ's interest in maintaining a competitive cottonseed industry.

“A lot of people have made the observation that the terms of the agreement not only allow Monsanto to invest $1.5 billion in the cotton industry but also created the opportunity for others to increase their investment in cotton. We'll see more investment, more at stake for all the companies involved, and therefore more competition to earn the farmers' business.”

D&PL

Eager to begin integrating Monsanto and D&PL, Tom Jagodinski is waiting for DOJ remedies to be completed.

“Right now, Monsanto has to maintain us as a separate, free-standing, independent entity,” says the D&PL president and CEO. “We're sitting here just as we were the day before the deal closed. We're anxious to begin planning for next year and obviously we need to do that jointly with Monsanto. Unfortunately, currently, we can't do that.”

Asked about any changes integration might have, Jagodinski says, “It's too early to speculate. I think the company will maintain a strong presence here (in Scott, Miss.). We've got all our Mid-South research and operations here, and I doubt that will change. Once the transaction closes, we'll have a better sense of any reorganization.”

When the D&PL board of directors considered companies D&PL could merge with, “Monsanto clearly had the best pipeline of traits for cotton. They're one of the few companies committed to cotton. Monsanto has a great, comprehensive tech pipeline. They're working on drought resistance, nitrogen utilization, yield improvement, sucking insect pests, plant bug control — a stack of products they'll bring to cotton farmers over the next few years. That will allow (the U.S.) cotton farmer to compete against the low-cost labor countries that also produce cotton.”

At the end of the day, “Monsanto gave up a lot to get the merger done. This strengthens competition on multiple fronts and in sub-markets of the U.S., Mid-South and Southeast.”

Any name change for D&PL? “No. (Monsanto) bought the company for the people and the name. D&PL is known around the world and has been in business since 1911. I don't think they'll change it.”

AMERICOT

If Lubbock, Texas-based Americot buys the NexGen brand as planned, it will immediately “have a larger footprint in the Southwest region,” says Terry Campbell, Americot general manager. “As a brand, NexGen is currently well-received by Southwest farmers. The germplasm previously owned by Syngenta that D&PL is divesting will complement our current portfolio of products like AM 1532 B2RF (a Bollgard II/Roundup Ready Flex). Our plans are to aggressively incorporate BGII and RRFlex into that germplasm and determine the geographical fit for those products.”

Campbell says farmers will begin to see new varieties in around five years.

How involved was Americot in the DOJ negotiations? “From early on. At the beginning, Monsanto said it would divest itself of Stoneville. After that, a number of companies inquired about purchasing it.

“One of the DOJ's concerns — maybe the major concern — was who would have control of the germplasm. Right off the bat, D&PL had the largest amount of germplasm, potential varieties to go to market. And there were geographical concerns — D&PL has the largest market share in the nation but their stronghold is the Delta states.”

Meanwhile, the stronghold of Bayer's FiberMax seed is the Southwest region “and the majority of its sales are in Texas. So, if (Bayer) acquires Stoneville, that gives them access to the Delta states where they'll compete with D&PL.”

If DOJ had left the NexGen brand as part of Stoneville, “it would have bolstered their share of the Texas market share. So the DOJ figured it would be best to separate those two brands. Once we were notified that the two brands might be separated, we inquired about purchasing it.”

If Americot acquires NexGen, “it immediately doubles our offerings to Southwest growers. That's immediate.”

The effect on Americot's breeding program will also be immense.

“I'm told by cotton breeders that (adding one) breeding program (to another) doesn't just equal two. Instead, one plus one will equal 100 — the opportunities for research and development of varieties are exponential. On top of that, when incorporating the conventional lines previously owned by Syngenta, the exponential benefits explode…

“A real positive in this deal is that we'll have the freedom to stack anyone's technologies with Monsanto's. The companies that own those technologies will have to grant us permission. But if Monsanto's BGII, BGIII, a new Roundup-enhanced gene and some other technology would make a good combination with another developer's technology, we can develop it.”