3. OVERVIEW
De Ruiter Seeds Fits Well Into Monsanto’s Acquisition
Strategy of Value Differentiation Through Innovation
INVESTMENT OPPORTUNITY
In an expanding agriculture environment, value is defined by scarcity or
innovation – Monsanto’s strategy is targeted on innovation: discovering
and developing technology that is game-changing
CATEGORY EXAMPLES OUTLOOK
► Delta and Pine Land • ASI and Delta and Pine Land
Intensify The Space
moving to integration
► American Seeds, Inc.
•
Strengthen position of the Leading position in
(ASI) Companies protected-culture established
core business, largely by
► Agroeste (Brazil) in vegetables
building the germplasm
► De Ruiter Seeds • Continued opportunity for
footprint of seeds
add-on international corn and
vegetable seed companies
► Seminis • Continually looking for areas
Expand The Space
where Monsanto can apply
core technology quickly or
Expansion to adjacent spaces
benefit from advanced
– where core technology can
research
be applied quickly and with
transformational benefits
► Yield and Stress R&D • Most highly transformational,
Redefine The Space
but rarest to find appropriate
Collaboration with BASF
fit
Investments that rewrite the ► SmartStax agreement with
landscape, providing new Dow
avenues, new technologies
► Global Seed Treatment
and creating new markets
Alliances
3
4. OVERVIEW
De Ruiter Seeds Accelerates Monsanto Vegetable Seed
Capability and Reach, Bolstering Five-Year Growth Prospects
Core rationale for bringing De Ruiter Seeds and Seminis together:
Monsanto’s vegetable seed foundation is strong and momentum is growing
With a streamlined portfolio and working-capital focus, the commercial backbone for Monsanto’s
vegetable seeds is stronger than it’s ever been. Strategic growth initiatives are in place to boost price
and drive a richer product mix, translating top-line growth to improved margins.
De Ruiter Seeds addition is transformational – providing a leading global position for the
high-growth protected-culture segment that Seminis lacked
The protected-culture segment is a premium-priced, high-growth segment where De Ruiter Seeds
excels, holding a leading global position. Combined with Seminis’ open-field product portfolio,
Monsanto’s vegetable seed portfolio is further diversified and better positioned to capture growth.
Monsanto Vegetable Seeds has greater germplasm depth and diversity
With leading positions in open-field and protected-culture germplasm, Monsanto has a deep and diverse
genetic pool that improves breeding opportunities, speeds product development and helps create
products that bring unique value to farmers.
Molecular markers create even greater differentiation
The infrastructure already in place for using molecular markers in vegetables is an immediate jump-start
for De Ruiter Seeds and promises even greater return across the total vegetable seed portfolio.
Addition of De Ruiter Seeds boosts vegetable seed growth
outlook, increasing both revenue and gross profit projections
by more than 20% through 2012 versus original forecasts
4
5. OVERVIEW
Key Elements of the De Ruiter Seeds Acquisition Agreement
• De Ruiter Seeds, leading international protected-culture vegetable seed
company, helps address gap in Monsanto’s vegetable and fruit seed portfolio in
this fast-growing segment
OPPORTUNITY • Molecular markers developed within Seminis have immediate applicability
• Improves opportunity to capture consumer benefit value created
• Monsanto fruit and vegetable seed business expected to grow to $1B in revenues
by 2012 with addition of De Ruiter Seeds
• Monsanto signs a definitive agreement to acquire De Ruiter Seeds for €546M,
(greater than $800M, depending on currency), less net debt, at a 15X 2007
EBITDA multiple
• Monsanto expects to fund the transaction with cash
FINANCIAL • Expected to be break even in first full fiscal year and accretive in second full
TERMS fiscal year following closing
• Positive contribution to operating cash in the first fiscal year following
closing
• Purchase-accounting adjustments expected for inventory step-up and in-
process R&D
• Consolidation of back-office functionality, intended to speed conversion to
Monsanto systems
• The proposed acquisition requires review and approval by the appropriate
NEXT STEPS international regulatory authorities. Because of these required regulatory
approvals, no timeframe has been announced for the closing of this transaction.
5
6. OVERVIEW
De Ruiter Seeds Is Proven Industry Leader, Delivering Strong
Financial Performance with Outlook for Continued Growth
DE RUITER SEEDS: Key Financial Data1
2005 2006 2007
NET SALES $118.6M $131.0M $144.7M
GROSS PROFIT $94.3M $103.6M $115.8M
GROSS PROFIT AS %
79% 79% 80%
OF SALES
1. De Ruiter Seeds financial performance collected in Euros according to the accounting standards of Dutch regulation. Historical data has been converted to dollars using a
consistent conversion rate of 1 Euro€ = 1.33 $US. All data is presented for calendar years.
DE RUITER SEEDS: DE RUITER SEEDS:
Products Business Reach
• Leading international vegetable seed • Family owned; based
15.3%
company in high-margin, growing in Bergschenhoek, The
33.2%
protected-culture segment Netherlands
• #1 position in tomatoes, rootstock for tomato • Current sales primarily
18.9%
breeding from Europe
• Top 5 presence: cucumbers, peppers
• Excellent relationships with early-adopter
32.6%
customer base
Northern Europe Southern Europe
Americas Others
Source: De Ruiter Seeds
6
7. OVERVIEW
Addition of De Ruiter Seeds Creates Balanced, Three-
Channel Approach to Vegetable Seed Opportunities
MONSANTO FRUIT AND VEGETABLE SEEDS:
3 Focused Channels
GLOBAL
BRAND: International Seed
Group (ISG)
CORE • Protected culture market • Open field and protected culture
• Open-field cultivation
INDUSTRY • Premier brand and market leader • Regionally focused brands,
• Largest global vegetable germplasm
SEGMENT:
in segment which maintain independent
base
sales forces, unique distribution
• Distinct protected-culture • First-mover advantage in molecular
channels and brand identities
customer base markers
INDUSTRY • >$600M in protected-culture • >$2B in open-field segment sales
SEGMENT segment sales • Industry growth rate of 4% CAGR,
SCOPE:
• Segment growing at estimated 8- with Seminis’ overall growth of 6%
10% CAGR CAGR
BUSINESS • ISG companies continue to
• Established portfolio, focused on • Focus on operational excellence
STRUCTURE: leverage Monsanto’s capital and
core crops: tomato, sweet pepper, complete – inventory and back-
technology resources for their
cucumber office integration with Monsanto in
local market segments in both
place
• 75%+ margins
open field and protected culture
• Streamlined portfolio focused on 25
• Organizational focus on higher-
core crops
technology customer base
maintained
• Quickly move to common back-
office systems and processes to
align with Monsanto’s standard
systems
• Existing markers have immediate • By 2009, Seminis should have 1,500 • Access to Monsanto R&D
Technology
Engine application markers in 9 core crops, 2,500 platform helps speed products
MOLECULAR markers in tomatoes and peppers can be brought to market and
• Markers help unlock consumer
MARKER creation of distinct products for
• Markers for agronomic and quality
OPPORTUNITY: and nutrition characteristics that
this specific channel
move downstream value into the characteristics boost the seed value
seed to growers – allowing greater
opportunity to price to value
7
8. OVERVIEW
De Ruiter Seeds Helps Address Gap in Monsanto Vegetable
Seed Portfolio in Growing Protected-Culture Segment
Portfolio Composition:
Portfolio Composition:
Percent of Sales1
Percent of Sales1
10%
12%
Open-Field
Protected-Culture
88% 90%
Pairing Seminis with De Ruiter Seeds
brings together the leading positions in
open-field and protected-culture
segments
• Both segments benefit from the coordinated
1. Size of pies not to scale with revenue molecular breeding infrastructure
generated by Seminis or De Ruiter Seeds
8
9. PROTECTED CULTURE
Year-Round Demand for Produce One of Several Factors
Driving Growth in Protected-Culture Segment
VEGETABLE INDUSTRY: PROTECTED CULTURE:
High-Margin Growth
2007 Sales by Segment1
PROTECTED CULTURE:
$US in billions
The use of enclosed structures to mitigate
disruption to production caused by
$0.1 agronomic factors such as rainfall,
>80% Gross Margin exposure to diseases or viruses, and
insects
$0.5
70-80% Gross Margin SEGMENT OPPORTUNITY:
Segment projected to grow at
approximately 8-10% CAGR over next 5-
years
$2.4 Premium-priced seed segment, with
55-65% Gross Margin
margins +75%
KEY DRIVERS OF SEGMENT GROWTH:
► Year-round fresh produce demand in
Europe and North America
► Improvements in diets in Asia Pacific
and increased demands for vegetables
Glasshouse Netted and Plastic Open Field ► Farmers’ growing interest in protecting
crops and driving yield
1. Monsanto estimates
9
10. PROTECTED CULTURE
Protected-Culture Seeds Serve High-Tech Veggie Growers;
Command Significant Premium Over Open-Field Seed
PROTECTED CULTURE VALUE: TOMATO EXAMPLE
INPUT COST/ REVENUE/ SEED SEED
YIELD/ACRE
ACRE ACRE RATE/ACRE1 COST/ACRE
OPEN-FIELD 32 tons $1.6K $2.4K 6Mx $42
PLASTIC HOUSE
57 tons $26K $32K 10Mx $1200
PROTECTED- CULTURE
GLASS HOUSE
230 tons $180K $207K 14Mx $2600
PROTECTED-CULTURE
PROTECTED-CULTURE VALUE CREATION Because of added value from
30
increased yield and quality,
VALUE PER ACRE
AVERAGE SEED
25 premium on greenhouse tomato
(INDEXED)
seed is 26X seed for open-field
20
cultivation
15
In protected-culture cultivation,
10
growers raise crops indoors for
5
controlled environment, consistent
0 quality and less pressure from
OPEN-FIELD PLASTIC HOUSE GREENHOUSE insects and disease
TOMATOES
1. Mx = 1000 seeds
11. PROTECTED CULTURE
Vegetable Seed Business On Track; De Ruiter Seeds Boosts
Achievement of Identified Goals
VALUE CREATION FOR VEGETABLE SEED PLATFORM:
STAGED OPPORTUNITIES FOR INCREASING GROSS PROFIT
VALUE CREATION OPPORTUNITY
New product launches;
use of molecular markers
Aggressively shift mix via protected culture and hybrid conversion
Identify and implement opportunities to price products to value
Assemble genetic maps for key crops
Focus on operational excellence; working capital management
2007 2008 2009 2010 2011 2012
PIPELINE
OPERATIONAL EXCELLENCE NEW VALUE CREATION
ADVANCEMENT
~2010 2012
2007 De Ruiter Seeds accretive to Monsanto vegetable
Monsanto vegetable Monsanto vegetable seed EPS seeds projected to
seed sales top contribution in second full fiscal be >$1B in sales,
$600M in 2007; 7.5% year following closing mid-60s margin
top-line growth
2008 2012
De Ruiter Seeds Molecular marker platform
acquisition announced – begins transforming
strengthens protected- Seminis and De Ruiter
portfolios
culture portfolio
11
