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Corn+Soybean Digest

The Deal's Off

Although Cargill's North American seed business sell-out to Hoeschst Schering AgrEvo GmbH is "set aside," the company is still anxious for a biotech partner.

But first the lawsuit-beleaguered Cargill has to square up with Pioneer Hi-Bred International, says Lori Johnson, a Cargill spokesperson.

"We think the rationale that led us to put the business up for sale still holds," says Johnson. "For our seed business to be successful in the future, it needs to be aligned with a biotechnology developer.

"But our first priority right now is to continue working with Pioneer and to resolve those issues."

Those issues include lawsuits first against Cargill and a former employee of both Pioneer and Cargill; then, announced just at our press deadline, another Pioneer lawsuit against Monsanto.

The lawsuits allege that the former Pioneer employee took proprietary material and information, and after being hired by Cargill used it to develop hybrids.

"As we started an extensive investigation to defend ourselves in that lawsuit, we uncovered a previously unknown problem with genetic material that, it appears, was introduced into our breeding program by a former Pioneer employee who then worked for Cargill and no longer does," Johnson says.

"There is a great deal of shock that we could find problems like this in the company," she adds.

Pioneer's beef with Monsanto, which bought Cargill's international seed business last June, is that it "should have known, did know or knows now" that Pioneer trade secrets were available, comments Tim Martin, a corporate communications director for Pioneer.

Right now Pioneer is most interested in removing its germplasm from competitors' lines, he says. "What we want is to clean our germplasm out of the pipeline of competitors, both in terms of the products they are selling and the products that are being made in their breeding programs," Martin says.

Pioneer is still trying to determine what it would request for damages, he adds.

"Pioneer is now claiming that some of the suspect genetic material may have been shipped overseas to our international seed businesses. We are still looking into that," says Cargill's Johnson.

Based on what Cargill's investigation has so far produced, only one corn hybrid for southern parts of Minnesota, Wisconsin and Michigan has been pulled from the market, she adds.

"At this point we don't believe there should be any problem with this germplasm in any of our 100-plus commercial products."

But Cargill appears to have lost a buyer for its Cargill Hybrid Seeds North America. In September of last year, AgrEvo and Cargill announced a purchase agreement for $650 million. By November 1998, after the Cargill lawsuit was first introduced, the hot news was that AgrEvo was rethinking the purchase price - down to $350 million. The deal was called off the first part of February.

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