Deere, Monsanto Slide After DOJ Files Suit To Block Precision Planting Deal; Ag Sector Lower

Several months after dozens of merger arb funds had their worst day in years when the US government effectively killed the Pfizer-Allergan deal, moments ago both Deere and Monstanto stocks dropped, after the DOJ filed a lawsuit seeking to block Deere's deal for Monsanto's Precision Planting.

  • U.S. FILES ANTITRUST SUIT AGAINST DEERE AND MONSANTO
  • DEERE DEAL FOR MONSANTO’S PRECISION PLANTING OPPOSED BY U.S.
  • U.S. FILES ANTITRUST LAWSUIT IN CHICAGO FEDERAL COURT
  • JUSTICE DEPARTMENT SUES TO BLOCK DEAL AS ANTICOMPETITIVE
  • AGRICULTURE SECTOR SEEING CONSOLIDATION WAVE WITH PENDING DEALS

The news promptly dragged down the entire ag complex...

  • DOW, DUPONT, SYNGENTA DROP ON DEERE, MONSANTO NEWS

... as it now appears that the US government has shifted away from blocking tax inversion deals, and is instead focusing on the US agri space.

As a reminder, in November 2015, Monsanto and Deere struck a deal to strengthen their cooperation in the emerging business of big-data services that help farmers improve crop performance. Deere agreed to buy Monsanto’s line of high-tech planting equipment, called Precision Planting, and in return make it easier for farmers to link their John Deere machinery to Monsanto’s Climate Corp. unit, which crunches data on crop performance and weather conditions to formulate farming advice. Terms of the deal weren’t disclosed.

The deal “benefits all our customers and will allow for more information and better data-driven insights to come out of Climate,” Mike Stern, president of the division at Monsanto, said Tuesday.

It appears that US government thought otherwise.