Novozymes and Monsanto form microbial alliance
COPENHAGEN (Reuters) - Denmark's Novozymes A/S (NZYMb.CO) and U.S.-based Monsanto Co (MON.N) have entered into a long-term alliance to boost research and commercialization of microbial products for agriculture, the Danish company said in a statement on Tuesday.
Monsanto will pay Novozymes an aggregate upfront sum of $300 million net.
"Today, we forge a game-changing alliance with the potential to transform global agriculture," Novozymes Chief Executive Peder Holk Nielsen said in the statement.
The cooperation, called The BioAg Alliance, will bring together Novozymes' capabilities in microbial discovery with Monsanto's larger commercial capabilities.
"I think it is the only and best way for Novozymes to succeed in this business area," Sydbank analyst Morten Imsgard said. "It makes really good sense to team up with a company who knows about commercialization on this area".
The microbial-based products involved in the tie-up are derived from naturally-occurring microorganisms such as bacteria and fungi and can protect crops from pests and diseases, as well as enhancing plant productivity and fertility.
The deal is subject to approval of national antitrust authorities and is not expected to close before early 2014.
It will therefore have no impact on Novozymes' 2013 results, but will make a slight positive contribution to earnings before interest and tax in 2014, Novozymes said.
The company has not yet disclosed its expectations for 2014.
Novozymes also announced a new stock buyback program worth up to 2 billion Danish crowns ($367.8 million). Its shares were up 3.2 percent by 1410 GMT, while the Danish benchmark was down 0.3 percent.
(Additional reporting by Stine Jacobsen; Editing by David Holmes)