Monsanto, Novozymes Team Up in Microbials Deal
10 December 2013 Monsanto and Novozymes said they entered into a strategic alliance to boost commercialization of naturally derived microbial solutions for growers.
The deal merges Novozymes’ commercial bioagricultural operations and capabilities in microbial discovery with Monsanto’s microbial discovery, field testing and commercial capabilities. Monsanto and Novozymes said the result will be a research, development and commercial collaboration to help farmers globally produce “more with less in a sustainable way.”
“Today, we forge a game-changing alliance with the potential to transform global agriculture. The combined capabilities of Novozymes and Monsanto create an innovation powerhouse with a unique opportunity and approach to unleash the transformational opportunity in naturally derived microbial solutions in agriculture,” said Peder Holk Nielsen, CEO of the Denmark-based Novozymes.
Microbial solutions form a significant part of the $2.3 billion agricultural biologicals industry, which has posted mid-teens sales growth each of the last several years, according to Monsanto. Microbial-based solutions are derived from various naturally-occurring microorganisms such as bacteria and fungi. They can protect crops from pests and diseases and enhance plant productivity and fertility, and have faster development cycles compared with other agricultural innovations, as well as broad geographic and crop applicability.
Monsanto, which began expanding its microbial portfolio last year with its acquisition of biotech company Agradis Inc., outlined the collaboration:
- Novozymes will be responsible for production and supply of the microbial solutions to Monsanto, building on its expertise within fermentation. Monsanto will serve as the lead for field testing, registration and commercialization of all alliance products.
- The companies will co-manage the alliance and co-fund research and development efforts.
- Monsanto will pay Novozymes an aggregate upfront payment of $300 million net in recognition of Novozymes’ ongoing business and microbial capabilities, and for Novozymes to supply alliance products.
- Marketing responsibility for Novozymes’ current product portfolio in agricultural biologicals will be transferred to Monsanto along with much of the Novozymes commercial organization currently responsible for that work. The two companies will work to ensure that existing customer relationships and know-how are maintained and further built on for short- and long-term success.
- Both companies will benefit from profits on commercialized products resulting from this alliance and those products brought into the alliance by the parties. Through the alliance, the companies will also test and sell commercial microbial products purchased from other suppliers to bring additional value to farmers.
The agreement is subject to the approval of antitrust authorities, and is expected to close in early 2014. Further terms of the deal were not disclosed.
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