Mon, Dow in Cross-License Deal

Zacks

Monsanto Company (MON), an agricultural services provider, recently inked a cross-licensing agreement with Dow AgroSciences LLC, a subsidiary of The Dow Chemical Company (DOW), in order to create a weed and insect control technology for corn. Financial terms of the agreement were not disclosed.

The agreement entitles Monsanto to use Dow’s Enlist Weed Control System, which allows corn to tolerate weed-killing chemicals, whereas in return, Dow 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.

This agreement has taken place to develop a new technology that will be used to thwart the resistance shown by crop-killing weeds and worms towards the existing technology. This new technology will be beneficial for the farmers in securing their crops against weeds and bugs.

The Enlist technology will be used for the first time in corn production, Monsanto being the first company to license it. The agreement will help in adding newer traits to the Monsanto-Dow co-developed SmartStax corn, which is used to control bugs as well as tolerate weed killers. This new development is expected to be of immense success to both the companies as the customer farmers will achieve better production results. Ensuing products will be competitively sold by the company that develops them.

Monsanto is involved in producing solutions and products that improve the agricultural quality and productivity. Dow AgroSciences is also involved in similar activities like developing crop protection and plant biotechnology solutions. A merger of technologies developed by these companies can bring about a rapid change in the agricultural industry, starting with corn. We expect these technologies to help both the companies prosper in the future.

Monsanto currently carries a Zacks Rank #2 (Buy). Other chemical stocks worth a look are Balchem Corp. (BCPC); carrying a Zacks Rank #1 (Strong Buy) and Andersons Inc. (ANDE); carrying a Zacks Rank #2 (Buy).

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