UPDATE 4-U.S. sues to stop Deere from buying Precision Planting

Wed Aug 31, 2016 4:32pm EDT
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(Adds comment from Monsanto unit Climate Corp, updates closing share prices)

By Diane Bartz and Meredith Davis

WASHINGTON/CHICAGO Aug 31 (Reuters) - The U.S. Justice Department filed a lawsuit on Wednesday aimed at stopping Deere & Co from buying Monsanto Co's Precision Planting farm equipment business, saying that the deal could make it more expensive for farmers to use fast, precise planting technology.

Deere said in a statement that it would fight the lawsuit and that the Justice Department's antitrust concerns were "misguided."

Monsanto said in November that it would sell to Deere its Precision Planting unit, which makes the components of precision planters. Precision Planting also sells its technology to retrofit older planters and to other planter manufacturers. Deere has its own precision planting technology.

The Justice Department said the proposed deal would mean higher prices for equipment for high-speed precision planting, which allows farmers to plant row crops like corn up to twice as fast as with conventional machinery. In February, Deere completed its acquisition of Monosem, which also makes precision planters.

A massive Deere ExactEmerge planter sells for about $150,000, which includes components for precision farming, while a Precision Planting retrofit kit costs about $30,000, J.P. Morgan analyst Ann Duignan estimated in a research note.

In particular, the Justice Department was concerned about Deere selling both the big machine planters themselves as well as the technology to make the big machines.

"By offering farmers high-speed precision planting retrofit kits at a fraction of the cost of a new planter, Precision Planting posed a formidable challenge to Deere and its profitable sales of new planters," the Justice Department said in its complaint, asking a court to stop the proposed transaction.   Continued...