Monsanto announced that it has signed a definitive agreement to acquire The Climate Corporation for a cash purchase price of approximately $930 million.
According to the company, the acquisition will combine The Climate Corporation's expertise in agriculture analytics and risk-management with Monsanto's R&D capabilities, and will provide farmers access to more information about the many factors that affect the success of their crops.
Monsanto expects to expand the The Climate Corporation's work in the area of data science, which its says represents the agriculture sector's next major breakthrough, and will immediately expand both the near- and long-term growth opportunities for Monsanto's business and Integrated Farming Systems platform.
"The Climate Corporation is focused on unlocking new value for the farm through data science," said Hugh Grant, chairman and chief executive officer for Monsanto. "Everyone benefits when farmers are able to produce more with fewer resources. The Climate Corporation team brings leading expertise that will continue to greatly benefit farmers and their bottom-line, and we want to expand upon this tremendous work and broaden their reach to more crops and more world areas. We look forward to working closely with our distribution partners and others in the agricultural industry to bring this suite of information resources to the farm."
The Climate Corporation was founded in 2006 by a team of software engineers and data scientists formerly with Google and other Silicon Valley technology companies. Since that time, the company has built an advanced technology platform for agriculture, combining hyper-local weather monitoring, agronomic data modeling, and high-resolution weather simulations to deliver a complete suite of full-season monitoring, analytics and risk-management products.
"Farmers around the world are challenged to make key decisions for their farms in the face of increasingly volatile weather, as well as a proliferation of information sources," said David Friedberg, chief executive officer for The Climate Corporation. "Our team understands that the ability to turn data into actionable insight and farm management recommendations is vitally important for agriculture around the world and can greatly benefit farmers, regardless of farm size or their preferred farming methods. Monsanto shares this important vision for our business and we look forward to creating even greater experiences for our farmer customers."
The Climate Corporation has a core set of support tools for agriculture, including products that help farmers boost yields on existing farmland and better manage risks that occur throughout a crop season. The Climate Corporation will continue to offer its current risk-management products, including an online service that provides crop planning, monitoring, and recommendations, and insurance offerings through its network of independent agents.
The acquisition is subject to customary closing conditions and is expected to close in the first quarter of Monsanto's 2014 fiscal year. Following the acquisition, The Climate Corporation will operate its business to retain its brand identity and customer experience. The company will continue to maintain headquarters in Silicon Valley and all of its employees will be offered continued employment.
Monsanto says that the acquisition of The Climate Corporation represents a natural extension of its vision to increase crop productivity, conserve natural resources and improve the lives of people around the world. It should also result in the expansion of The Climate Corporation's capabilities in data science, agriculture's next major growth frontier, an area that Monsanto says represents a potential opportunity of $20 billion beyond the company's core focus today.
The companies estimate the majority of farmers have an untapped yield opportunity of up to 30 bushels to 50 bushels in their corn fields, and they believe that advancements in data science can help further unlock that additional value for the farm.
The combined capabilities will immediately expand both the near- and long-term growth opportunities of Monsanto's Integrated Farming Systems platform and research and development pipeline in the coming years.
Longer-term, the combination is expected to broaden the product choices available to farmers beyond Monsanto's current row crop and vegetable portfolio, both inside and outside of the United States.