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Novozymes and Monsanto Form Strategic Microbial Alliance

Novozymes and
Monsanto announced this morning what they call a long-term strategic alliance
to research and commercialize microbial products for farmers.

The firms
term it the BioAg Alliance. Company officials say it will allow the firms to leverage
employees, technologies and commercial assets in the companies’ agricultural
biologicals portfolios.

In a press
release, the firms say this alliance brings together 
Novozymes’
commercial BioAg operations and capabilities within microbial discovery,
development and production with Monsanto’s microbial discovery, advanced
biology, field testing and commercial capabilities. The result will be a
research, development and commercial collaboration to help farmers globally
meet the challenge of producing more with less in a sustainable way – for the
benefit of agriculture, consumers, the environment and society at large, say
company officials.

“The combined
capabilities of Novozymes and Monsanto create an innovation powerhouse with a
unique opportunity and approach to unleash the transformational opportunity in
naturally derived microbial solutions in agriculture,” says Peder Holk Nielsen,
CEO of Novozymes.

Says Robb
Fraley, Chief Technology Officer of Monsanto:  “Just as Monsanto has done with leadership
investments in our precision agriculture platform, we see this collaboration as
being the same type of catalyst for taking our biologicals work from a
technology to a full-fledged platform that represents the next layer of
opportunity for growers to drive yield and productivity while helping the
preservation of finite natural resources in our precious planet


Sustainable Solutions

Microbial
solutions are a significant part of the agricultural biologicals industry, which
today represents roughly $2.3 billion in annual sales and has posted mid-teens
sales growth each of the last several years, the companies said in a press
release. Microbial-based solutions are derived from various naturally-occurring
microorganisms such as bacteria and fungi. They can protect crops from pests
and diseases and enhance plant productivity and fertility.


Details

Under the
collaboration:

 Monsanto
and Novozymes will maintain independent and complementary internal and external
discovery research programs to identify microbial targets with the potential to
help farmers.

 Novozymes
will be responsible for production and supply of the microbial solutions to
Monsanto, building on its expertise within fermentation. Monsanto will serve as
the lead for field testing, registration and commercialization of all alliance
products.

 The
companies will co-manage the alliance and co-fund research and development
efforts.

  Monsanto will pay Novozymes an aggregate upfront payment of $300
million net in recognition of

Novozymes’
ongoing business and microbial capabilities, and for Novozymes to supply
alliance products.

 Marketing
responsibility for Novozymes’ current product portfolio in agricultural
biologicals will be transferred to Monsanto along with much of the Novozymes
commercial organization currently responsible for that work. The two companies
will work to ensure that existing customer relationships and know-how are
maintained and further built on for short- and long-term success.

 Both
companies will benefit from profits on commercialized products resulting from
this alliance and those products brought into the alliance by the parties.
Through the alliance, the companies will also test and sell commercial
microbial products purchased from other suppliers to bring additional value to
farmers.

The agreement is subject to the
approval of the relevant national antitrust authorities to the extent required.
The alliance is expected to close in early 2014. Further terms of the alliance
were not disclosed.

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