Monsanto May Get Activist Looking at Breakup, JPMorgan Says

Apr 03, 2014 4:22 pm ET

(Updates with closing share price in last paragraph.)

April 3 (Bloomberg) -- Monsanto Co. may attract an activist investor after its shares underperformed since a breakup of the world’s largest seed company may create more value for investors, JPMorgan Chase & Co. said.

“We think there is a reasonable possibility of an activist appearance at Monsanto, although we have neither intimations nor knowledge of any activist intentions,” JPMorgan analysts led by Jeffrey J. Zekauskas said today in a note.

Monsanto could explore the sale of its Agricultural Productivity segment, which makes Roundup herbicide, said Zekauskas, who raised his rating on the stock to buy from hold. The St. Louis-based company could also take on $11 billion in debt to buy back shares, he said.

Activist shareholders have already targeted Monsanto’s two largest U.S. competitors in the past year. Daniel Loeb’s Third Point LLC has called for a breakup of Dow Chemical Co., which produces genetically modified seeds as well as petrochemicals. DuPont Co., another chemicals-and-seeds conglomerate, is spinning off its titanium-dioxide business after Nelson Peltz’s Trian Fund Management LP amassed a stake.

Sara Miller, a Monsanto spokeswoman, declined to comment on the JPMorgan note.

Monsanto rose 2.3 percent to $117.04 in New York. It has gained 12 percent in the last year while the Standard & Poor’s 500 Index has climbed 22 percent. Monsanto yesterday posted fiscal second-quarter earnings that exceeded analysts’ estimates.