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Monsanto seed deal delayed
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May 21, 1999: 1:11 p.m. ET
Deadline extended with Delta and Pine Land Co. amid regulatory reviews
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NEW YORK (CNNfn) - The board of cotton seed breeder Delta and Pine Land Co. voted Friday to extend the deadline on the company's estimated $1.5 billion merger deal with Monsanto Co., as federal regulators have not yet signed off on the proposed arrangement.
The deal, first announced last June, was scheduled to close by June 30. Delta (DLP) officials said Friday that the company's board voted to extend the deadline for completing the merger to Dec. 31.
"We continue to make progress on completing this transaction," Roger Malkin, Delta's chairman and CEO, said in a statement. The company's relationship with Monsanto "continues to be outstanding," he said.
Monsanto (MTC), a life sciences and pharmaceutical company, has said it is working with regulators from the U.S. Justice Department, which is concerned that the company would dominate the market through the merger with Delta, the No. 1 cotton seed breeder in the country.
In what analysts view as an attempt to satisfy regulators, Monsanto said in January it was putting up its Stoneville Pedigreed Seed Co. unit for sale. A spokeswoman for St. Louis-based Monsanto, Lori Fisher, said Friday that the company has "entertained some bids" but she declined to comment further on the status of the sale.
Delta has about 70 percent market share, while Stoneville is ranked second, with about 15 percent, said James Wilbur, an analyst at Smith Barney, who has a "hold" rating on Delta and a "buy" on Monsanto.
"Basically, the cotton seed business would be really controlled by Monsanto if the deal were allowed to go through without any changes," he said.
The extension of the merger indicates that the companies are serious about wanting to conclude the deal, said George Dahlman, a food and agribusiness analyst at Piper Jaffray. "We think Monsanto has convinced the Delta Pine board that it's still serious about wanting to acquire them," he said. Piper Jaffray has a neutral rating on Delta.
According to the terms of the merger, each Delta share would be converted into 0.865 share of Monsanto. There are approximately 40 million Delta shares outstanding. Based on Friday afternoon's trading price of 44-1/2, the deal would be worth about $1.5 billion.
Shares in Scott, Miss.-based Delta were down 1-1/8 at 32/3/8 on Friday afternoon.
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