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Monsanto and Remington to Form JV, Capture Market Demand

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Renowned agricultural chemicals provider Monsanto Company is all set to join forces with Remington Holding Company, LLC, to make the most of the presently booming sorghum market demand.

Monsanto and Remington would soon form a new joint venture (JV) that would encourage new innovations and investments in sorghum production. The JV, which is to be named Innovative Seed Solutions, LLC, would primarily help in enhancing the market access for the crop.

The transactions that the companies will make in order to form the JV have been estimated to be worth $169.5 million and would involve a cash payment of $110.5 by Remington. The JV would be controlled by a newly established operational board comprising senior executives of both companies. Remington and Monsanto would hold 60% and 40%, respectively, in the JV.

Deal Benefits

The JV would likely support Monsanto’s revenue growth strategy by expanding the technology and commercial reach of its premium product – germplasm. Additionally, Monsanto anticipates the new JV to help it offer new variations of sorghum products to the farmers in the near term. Such products would be widely distributed by Monsanto from its personalized commercial channels such as DEKALB, Asgrow and certain other regional brand dealers. As of Jun 16, 2016 Monsanto’s stock price was $108.9. We expect the formation of the new JV to drive investors’ confidence on the stock.

Remington is a popular customized seed processing, production, logistics and related services provider. The company perceives that the formation of Innovative Seed Solutions, LLC would further strengthen its partnership-focused corporate model. The deal is also expected to solidify its foothold in the global retail seed industry.

Stocks to Consider

Monsanto currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Bunge Limited (BG - Free Report) , First Majestic Silver Corp. (AG - Free Report) and AgroFresh Solutions, Inc. . All the three companies presently hold a Zacks Rank #2 (Buy).

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