Monsanto to acquire The Climate Corporation to improve yields

News
Oct 4, 2013

Last week Monsanto announced its acquisition of the high-tech weather insurer, The Climate Corporation and shared The company’s plans to boost the seed company’s farming business.

Monsanto purchased the Climate Corporation for a cash price of approximately $930 million. The acquisition will combine The Climate Corporation’s expertise in agriculture analytics and risk-management with Monsanto’s R&D capabilities, according to the company, and will provide farmers access to more information about the many factors that affect the success of their crops. The companies’ combined capabilities will support greater productivity while utilizing the planet’s finite resources more precisely.

The acquisition is expected to expand on The Climate Corporation’s leadership in the area of data science, which represents the agriculture sector’s next major breakthrough, and will immediately expand both the near- and long-term growth opportunities for Monsanto’s business and Integrated Farming Systems platform.

The Climate Corporation was started to help farmers around the world protect and improve their farming operations with uniquely powerful software and insurance products. The company offers hyper-local weather monitoring, agronomic data modeling, and high-resolution weather simulations to deliver climate.com, a solution that helps farmers improve their profits by making better informed operating and financing decisions. In addition, it offers an insurance option that pays farmers automatically for bad weather that may impact their profits. The company is also an authorized provider of the U.S. Federal crop insurance program.

“The Climate Corporation is focused on unlocking new value for the farm through data science,” said Hugh Grant, chairman and chief executive officer for Monsanto.

“Everyone benefits when farmers are able to produce more with fewer resources. The Climate Corporation team brings leading expertise that will continue to greatly benefit farmers and their bottomline, and we want to expand upon this tremendous work and broaden their reach to more crops and more world areas. We look forward to working closely with our distribution partners and others in the agricultural industry to bring this suite of information resources to the farm.”

The Climate Corporation was founded in 2006 by a highly successful team of software engineers and data scientists formerly with Google and other leading Silicon Valley technology companies.

“Farmers around the world are challenged to make key decisions for their farms in the face of increasingly volatile weather, as well as a proliferation of information sources,” said David Friedberg, chief executive officer for The Climate Corporation.

“Our team understands that the ability to turn data into actionable insight and farm management recommendations is vitally important for agriculture around the world and can greatly benefit farmers, regardless of farm size or their preferred farming methods. Monsanto shares this important vision for our business and we look forward to creating even greater experiences for our farmer customers.”

The Climate Corporation has a core set of support tools to benefit farmers. These include products that help them boost yields on existing farmland and better manage risks that occur throughout a crop season. The Climate Corporation will continue to offer its current risk-management products including an online service that provides crop planning, monitoring, and recommendations, and insurance offerings through its network of independent agents.

The acquisition is subject to customary closing conditions and is expected to close in the first quarter of Monsanto’s 2014 fiscal year. Following the acquisition, The Climate Corporation will operate its business to retain its distinct brand identity and customer experience. The company will continue to maintain headquarters in Silicon Valley and all of its employees will be offered continued employment.

Combined Company to Be a Leader in Data Science, Acquisition Expected to Drive Near-and Long- Term Growth Potential The acquisition of The Climate Corporation represents a natural extension of Monsanto’s vision to increase crop productivity, conserve more of our planet’s natural resources and improve the lives of people around the world, the company predicts. It will also greatly expand The Climate Corporation’s capabilities in data science, an area that represents a potential opportunity of $20 billion beyond Monsanto’s core focus today. The companies estimate the majority of farmers have an untapped yield opportunity of up to 30 bushels to 50 bushels in their corn fields, and they believe that advancements in data science can help further unlock that additional value for the farm.

The combined capabilities will immediately expand both the near- and long-term growth opportunities of Monsanto’s Integrated Farming Systems platform and research and development pipeline in the coming years, according to the companies’ release.

Longer-term, the combination is expected to broaden the product choices available to farmers beyond Monsanto’s current row crop and vegetable portfolio, both inside and outside of the United States. This includes the delivery of insight and decision-support tools that could increase agriculture productivity on a billion planted acres around the globe.

There were a few naysayers that called Monsanto’s announcement a distraction from the company’s quarterly performance report, which was released last Wednesday, the same day as the acquisition announcement. The seed and biotech company saw fourth quarter losses at $249 million, or about 47 cents per share. It blamed much of the losses on lower soybean seed sales. — Traci Eatherton, WLJ Editor

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