Monsanto Looking to wheat

Monsanto Looking to wheat to drive share prices up

Looking for more ways to increase their share price, Monsanto is looking to wheat as a significant means of doing that, and recent aquisition of WestBred LLC is the first significant step in that direction, although it could take a decade before the investment pays off.

Knowing it needs a way to expand market share in wheat, Monsanto a Monsanto analyst, citing expectations that the company's $45 million acquisition of WestBred LLC won't add to earnings until 2016, and will add less than a dime a share by 2025.

Privately held WestBred, with offices in Montana, specializes in wheat germplasm, the genetic material of a seed.

Monsanto said about the investment that it will strengthen the future growth of Monsanto's seeds and traits platform; and allow farmers to benefit from the company's experience in drought-, disease- and pest-tolerance innovations.

This action by Monsanto, the world's biggest provider of seeds, signifies the company's re-entry to the wheat market, but will only increase earnings several years down the road at best.

Assuming Monsanto has a 20 percent share of the certified seed market by 2025, estimates are wheat could only add between 7 cents and 9 cents a share to earnings a share by 2025.

"Clearly, Monsanto needs to find ways to drive significant market share gains, wheat platform should not be accretive to earnings until 2016 or later."

Managing expectations, Monsanto is calling the acquisition a long-term investment that won't add to earnings until the middle or latter part of the next decade.

Monsanto Looking to wheat to drive share prices up