EXCLUSIVE: Monsanto-Delta deal nears U.S. antitrust OK

By Peter Kaplan

WASHINGTON (Reuters) - U.S. antitrust authorities are poised to approve plans by biotech crop developer Monsanto Co. (MON.N) to buy Delta and Pine Land Co. DLP.N on the condition that the companies divest some key assets, a source familiar with the deal said on Thursday.

Antitrust officials at the Justice Department are working out final details of a settlement deal that would require the companies to sell some genetic material owned by Delta and Pine that is used to develop new cotton seed varieties, the source said.

The genetic material, known as germplasm, would be sold to a rival company in the business, the source said.

Monsanto would also follow through on previously announced plans to sell its Stoneville cotton seed brand to get approval of the $1.5 billion deal, according to the source, who spoke on condition of anonymity.

Justice Department spokeswoman Gina Talamona said the investigation of the deal was ongoing and declined to make further comment.

Monsanto spokesman Lee Quarles said: "The Department of Justice's review is not yet complete and we look forward to their decision." He declined to comment further.

The conditions imposed by the department would resolve its concerns about how the combination could affect competition in the cotton seed business, the source added.

Monsanto's acquisition of Delta and Pine has provoked opposition from farm and consumer groups as well as competitors including DuPont Co. (DD.N) and Syngenta AG (SYNN.VX).

The deal would give Monsanto a dominant position in the $40 billion cotton seed market, boosting its share of the market from about 12 percent to between 50 percent and 60 percent.

Last year, Monsanto's biotech crop traits were planted on roughly 75 percent of U.S. cotton acres, according to data from Monsanto and the U.S. Agriculture Department.

The genetically modified traits are incorporated into seeds to help them resist insects and tolerate herbicides.

Scott, Mississippi-based Delta and Pine operates the largest and longest-running private cotton seed breeding program in the world.

Rivals complained that the deal would give Monsanto too big a share of biotech traits in some crops and harm growers by reducing seed options.

The National Black Farmers Association has said it will file a lawsuit to stop the deal if it receives Justice Department approval.

And a consumer group, the Center for Food Safety, has also lobbied against the merger, saying cotton seed prices have risen 240 percent from 1995 to 2005 due primarily to fees charged for genetically engineered traits.