Monsanto Company (MON - Analyst Report), an agricultural services provider, recently entered into a contract with Bayer CropScience, a wing of Germany based Bayer AG. The deal relates to the licensing of next-generation and enabling technologies in corn and soybean production. Financial terms of the agreement were not revealed.
Per the agreement, Bayer CropScience, which deals in products and solutions to manage pests in various agricultural fields, will empower Monsanto to use Bayer’s corn rootworm control and herbicide tolerance technologies in its applications.
Bayer CropScience, on the other hand, will be entitled to use Monsanto’s GenuityRoundup Ready 2 Yield and Genuity Roundup Ready 2 Xtend technologies for use in soybeans, in US and Canada. The arrangement takes place under a license through which Monsanto earns royalty. Also, Bayer CropScience will gain access to Intacta RR2 PRO in soybeans for use in Brazil.
Only last week Monsanto entered into another cross-licensing deal with Dow AgroSciences LLC, a subsidiary of The Dow Chemical Company (DOW - Analyst Report) , in order to create a weed and insect control technology for corn.
The agreement entitled Monsanto to use Dow’s Enlist Weed Control System, which allows corn to tolerate weed-killing chemicals, and Dow in turn, will be able to reap the benefits of Monsanto’s upcoming Corn Rootworm III, which is useful in killing tiny insects that feed on corn roots.
The new deal with Bayer CropScience takes a step further. Bayer’s corn rootworm control technologies, if put into proper use, will be exploited by Monsanto in its efforts to control insects feeding on corn, which will in turn be licensed to Dow.
The proper execution of these deals will ultimately make the farmer customers the actual winners with the availability of new options and choices. Monsanto currently carries a Zacks Rank #2 (Buy). Other chemical stocks worth a look are Balchem Corp. , carrying a Zacks Rank #1 (Strong Buy) and Andersons Inc. (ANDE - Analyst Report), carrying a Zacks Rank #2 (Buy).