Monsanto Forms American Seeds, Inc.

"The pace of technological innovation has changed the seed industry and it's clear in conversations with some of our seed-company customers that the needs for capital and technology for growth have accelerated," says Carl Casale, executive vice president for Monsanto.

Casale made the comment regarding the announcement of the formation of American Seeds (ASI), a new holding company established to support regional seed businesses with capital, genetics and technology investments. "In recognizing these needs, we developed ASI as a vehicle to allow regional seed companies to gain faster and better access to capital, genetics and technology while preserving the brands and approaches that their customers know and trust."

These investments will allow the operating companies of ASI to more directly connect their customers to significant innovations in genomics-based breeding and other new technologies while continuing to operate autonomously and locally, providing great service to their customers and building the value of their brands. ASI is a wholly owned subsidiary, reporting into Monsanto's U.S. Crop Production business along with the company's existing branded and licensing businesses.

ASI announced its first venture today, acquiring Channel Bio Corp., a leading U.S. seed company based in Kentland, Indiana.

"We view Channel as a cornerstone investment that will give us more opportunity for growth, accelerating the delivery of important technology advances to customers through the terrific relationships, local brands and quality service for which Channel and its management team are known," Casale says.

Channel currently owns and manages three successful brands: Crow's Hybrid Corn Company, Midwest Genetics Seed Genetics, Inc. and Wilson Seeds. Since the time of these additions to Channel, seed sales have more than doubled under the entrepreneurial leadership of the Channel management team.

ASI acquired Channel Monday in a cash transaction for $120 million. With one-time charges associated with the purchase, the transaction is expected to be dilutive to earnings per share (EPS) in fiscal year 2005. However, the transaction does not change the company's 2005 fiscal year EPS guidance, which is in the range of $2.16 to $2.29 on a reported basis, and $1.77 to $1.90 on an ongoing basis. The acquisition is expected to be accretive in fiscal year 2006.

Channel currently holds approximately 2% of the U.S. corn seed market in its three seed brands. Monsanto's branded seed business -- including the DEKALB and Asgrow brands -- holds approximately 14% of the U.S. corn market. Through its Holden's/Corn States licensing business, Monsanto provides germplasm and traits to independent seed companies and distributors who reach 35% of the market.