CBOT soy futures tumble on Roundup Ready soy news

CHICAGO, Aug 16 (Reuters) - CBOT soybean futures tumbled 14 to 16 cents per bushel midday Thursday on concerns about news that an extra gene was found in Monsanto's Roundup Ready soybeans by scientists,  traders said.

Funds and commission houses were sellers with Merrill Lynch,  ED&F Man International, Refco, and Salomon Smith Barney all  selling CBOT soybeans, traders said.

Stops were seen at $5.01 per bushel in November soybeans.  Concerns were raised over the long-term effect the news will have  on U.S. exports, traders said.
http://www.agriculture.com/worldwide/AgricultureFarming/08_16_20

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Agriculture chemical giants feel pressure
by Jonathan Braude in Berlin and Kevin DeGeeter in New York
The Deal.com, Aug-15-2001

German chemicals-to-pharmaceuticals conglomerate Bayer AG has not yet signed a definitive agreement to acquire Aventis CropScience, the agriculture products unit of Franco-German drug maker Aventis SA. But make no mistake, rival chemical companies are already plotting the next wave of consolidation in anticipation of Bayer's EUR7 billion ($6.4 billion) acquisition. The combination of Aventis CropScience, the fourth-largest supplier of agricultural chemicals, with seventh place Bayer has renewed pressure on the three remaining midsized competitors - E. I. du Pont de Nemours and Co., The Dow Chemical Co. and BASF AG - to either bulk up or be acquired. At the top of the roster of likely prey or predators are Monsanto Co and Sygenta AG. The two companies round out the list of seven agricultural products giants that, over the past decade, have merged to become the dominant suppliers of genetically modified seeds, herbicides, insecticides and other chemicals used by farmers. But this clutch of companies is about to get smaller. The United States' second largest crop sciences company, Wilmington, Del.-based DuPont, was the first to disclose its acquisition plans. On June 1 Richard Goodmanson, chief operating officer of DuPont, told analysts the company would seek an alliance or merger agreement with one of its four rivals: Dow or Monsanto of the United States, BASF of Germany or Anglo-Swiss company Syngenta. A DuPont spokesperson declined to elaborate on Goodmanson's comments. But DuPont's options are fairly straightforward as choosing a partner may be simply a matter of timing.

Merging with Monsanto would create a dominant North American franchise. But accounting restrictions must be put on hold until April. The reason: In March last year Pharmacia & Upjohn Inc. acquired the pharmaceutical and crop sciences businesses of Monsanto in a $31.9 billion stock swap. Under U.S. accounting laws, the company can't spin off or sell the agricultural products for two years.

 Peapack, N.J.-based Pharmacia hasn't disclosed its plans for Monsanto and representatives from the companies didn't return calls for comment. In October, however, Pharmacia sold a 15% stake to the public for $20 per share in what analysts expect is the first step toward spinning off Monsanto. If DuPont wants to move more quickly, many analysts think BASF would be the best fit. BASF, currently the sixth-largest crop sciences company, expects agricultural sales of $3.3 billion this year. Hans Reiners, president of BASF's Agricultural Products Division, was on the investor conference circuit this spring explaining that BASF will "play an active role in the restructuring of the industry" and hinting that acquisitions or partnerships were on the horizon. The company has joined with American companies before. In June 2000, BASF acquired Cyanamid Agricultural Products, a subsidiary of Madison, N.J.-based drug maker American Home Products Corp., for $3.8 billion.

 The transaction more than doubled sales and gave BASF a foothold in the United States. One third of the company's agricultural products revenues now comes from North America. Commerzbank AG analyst Michael Vara believes "It's certainly a possibility" that BASF Agrochemical could merge with DuPont's seed business. He believes the DuPont unit would be "a nice fit" for BASF as it had strong U.S. sales, a good seed business and know-how in biotechnology. Because BASF was strong in Europe as merger would produce a global business with a good regional portfolio, he added. Vara said a deal would create the opportunity for cost synergies to help BASF compete following the synergies expected by Bayer from its purchase of CropScience. Although detailed financial projections won't be unveiled until a definitive agreement is signed, Bayer said it hopes to cut $455 million from operating expenses. Last week, Bayer said the acquisition only awaits final consultation with employee representatives, as required by French law. The combined company had pro forma 2000 sales of $6 billion. Only industry bellwether Syngenta is larger. The Basel, Switzerland-based company - a pan-European crop sciences amalgamation formed from the agricultural products units of Swiss pharmaceutical company Novartis AG and Britain's AstraZeneca plc - is working to recognize similar synergies from its formation last year. The company is expected to sit out the next round of dealmaking. Would DuPont and BASF be able to work out which would have control after a merger? Vara worries that BASF could have problems accepting a junior role if that was DuPont's intention.

 Another analyst, who declined to be identified, concurred. "BASF won't want any deal if they don't have control," said the analyst. "Perhaps they could buy DuPont seed, but I doubt if that's what DuPont had in mind."

 Consequently, analysts believe that BASF may look to acquire a spinoff from the Aventis CropScience deal - if Bayer had to sell herbicide interests to meet anti-trust provisions - or to put its hat in the ring for St.   Louis-based Monsanto. Midland, Mich.-based Dow faces similar decisions. Like BASF, Dow made an unsuccessful bid for Aventis CropScience. The company has closed several smaller deals. In June, Dow AgroSciences llc, Dow Chemical's Indianapolis-based farm products subsidiary, acquired the agricultural chemical division of Rohm and Haas Co., a Philadelphia-based specialty chemical manufacturer, for $1 billion. After consolidating the Rohm and Haas business and the acquisitions of Cargill Hybrid Seeds, a unit of Minneapolis-based Cargill Inc., and the acetochlor herbicide business from AstraZeneca, Dow AgroSciences expects to report sales of about $3 billion this year. But Dow wants to get bigger. "We intended to grow through acquisitions, alliances and internal research and development," said a Dow AgroSciences spokesperson.

But with whom? Analysts are skeptical Dow could strike a deal with DuPont anytime soon. After an eighteen month battle with competition regulators, Dow closed its $11.6 billion purchase of Danbury, Conn.-based Union Carbide Corp. on Feb. 6.

The company may not want the distraction of another deal. But Dow may be eyeing a deal with Monsanto, which would have to wait until next year to pursue. "A merger with Monsanto would offer significantly more growth potential to Dow AgroSciences than an agricultural joint venture with DuPont," said Donald Carson, an analyst who covers Dow for JP Morgan Securities.

If Monsanto isn't spun off, Carson thinks Dow and DuPont could merge their agricultural chemical units and spin off the combined company - similar to the transaction that formed Syngenta in Europe. But at current trading multiples, a spinoff may be less attractive than an outright sale. Bayer is paying 9.4 times Ebitda for Aventis CropScience, well above the six to seven times Ebitda multiple investors are paying for publicly traded companies such as Monsanto and Syngenta.

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