Fitch Affirms Monsanto at 'A-/F2' on Delta and Pine Land Acquisition

Business Wire, June 4, 2007

CHICAGO -- Fitch has affirmed Monsanto's credit ratings after the company's announcement that it had reached an agreement with the U.S. Department of Justice (DOJ) that will allow it to complete its acquisition of Delta and Pine Land Company for $1.5 billion. The ratings apply to approximately $1.6 billion of outstanding debt. Fitch's current ratings on Monsanto are as follows:

--Issuer Default Rating (IDR) 'A-';

--Senior unsecured debt 'A-';

--Bank loan 'A-';

--Commercial paper 'F2'.

The Rating Outlook is Stable.

Fitch believes that Monsanto's commitment to a strong balance sheet will result in a capital structure indicative of the current rating category. A combination of cash and short-term debt is expected to be used to complete the purchase. Monsanto will be required to divest certain assets including its U.S. branded cotton seed business (Stoneville). The company plans to close its acquisition and resulting divestitures as soon as possible following the required approvals from the court and the DOJ. Monsanto had cash and marketable securities totaling $1,565 million on Feb. 28, 2007.

The completion of the transaction would also resolve a host of litigation challenges between the companies, including licensing and royalty disputes, and a breach of merger agreement allegation seeking $2 billion in punitive and compensatory damages.

During the interim period between when the company completes its acquisition and when it completes its divestitures, the Delta and Pine Land business will operate independently of Monsanto's other commercial operations.

Monsanto has been cooperating with the DOJ regarding the proposed divestitures and is now requesting final approval of those divestitures from the DOJ under the terms of its agreement. Once the divestiture of the Stoneville and NexGen businesses has been completed, Monsanto will begin combining the Delta and Pine Land business into its business operations.

Free cash flow remains solid at $1.24 billion (cash flow from operations of $1.85 billion less $395 million of capital spending and $229 million in dividends) for the last 12-month (LTM) period ending Feb. 28, 2007. Fitch currently believes that Monsanto will generate free cash flow in fiscal 2007 of greater than $700 million given stronger than expected operational performance.

Fitch expects the company, in the intermediate term, to complete the four-year $800 million share repurchase program announced in October 2005. The company had satisfied $114 million of the authorization through the end of fiscal 2006. The repurchase activity is anticipated to offset share dilution from stock option exercises which have increased annually due to rising equity value. Sustained strong free cash flow generation mitigates any of Solutia Inc.'s liabilities that may become Monsanto's obligation.

Monsanto is a provider of herbicides, conventional and hybrid seeds, and genetically modified seeds and traits to the agricultural industry. The company holds leading positions in the glyphosate herbicide market and in seeds and biotechnology traits.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.