The Motley Fool Previous Page

Monsanto Splices In Its Competitors' Best Traits

Jacob Roche
April 21, 2013

Monsanto (NYSE: MON) has been a busy bee lately. In March, Monsanto and DuPont (NYSE: DD) settled multiple patent lawsuits against each other, instead agreeing to cross-license some of each other's technology. Last week, Monsanto inked another cross-license deal with Dow Chemical (NYSE: DOW), and finally another with Bayer AG this week.

Hard to tell where one ends and the other begins
Under the DuPont deal, DuPont will now pay Monsanto $1.75 billion over 10 years to use Monsanto's Roundup-ready soybean genes, which are used in about 90% of the soybeans grown in the United States. DuPont will also get to combine these genes with its own genes to create soybeans with multiple traits, which was the basis of Monsanto's initial patent infringement suit. In return, aside from the $1.75 billion, DuPont will drop an antitrust lawsuit it had filed against Monsanto.

As for the Dow Chemical deal, Monsanto will get to license Dow's herbicide-resistant corn, and in return, Dow gets to use Monsanto's newest corn rootworm resistance technology, which is still in the pipeline.

It's a good thing Dow is getting the new version of the technology, because in 2011, researchers began noticing that the rootworms in some fields in Iowa had become resistant to Monsanto's corn, which has a gene that essentially makes the corn a pesticide for that specific pest. The EPA now believes the resistant rootworms have spread to five other states in the Midwest. The EPA also notes that the Monsanto-resistant rootworms are more likely to develop a resistance to SmartStax, a combination herbicide-pesticide-resistant seed. So overall, this is a major headache for Monsanto,