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Fitch: DuPont/Monsanto Licensing Settlement Credit Positive



  Fitch: DuPont/Monsanto Licensing Settlement Credit Positive

Business Wire

CHICAGO & NEW YORK -- March 28, 2013

E. I. du Pont de Nemours and Co. (DuPont; IDR of 'A') agreed to a new series
of licensing agreements with Monsanto Co. (IDR of 'A+') this week.
Additionally, the companies agreed to put an end to their countering legal
claims. Fitch Ratings believes these developments are marginally credit
positive for both companies.

Under the agreement, DuPont will gain broad access to additional Monsanto
traits and testing data required for expedient regulatory approval, and DuPont
will be given relief from a $1 billion jury verdict finding they violated a
contract with Monsanto that prohibited the stacking of Monsanto's RoundUp
Ready trait with another glyphosate resistant trait. In turn, DuPont will drop
its antitrust claims against Monsanto. This reduces uncertainty for Monsanto
relating to the outcome of an antitrust trial, which could have been damaging
given the potential for treble damages. Monsanto also secures minimum revenues
for certain traits through 2023. In addition, Monsanto's revenue gain via the
licensing agreements of its genetically modified seed technology could be
meaningful as DuPont's use of the new technology reaches its customers.

Under terms of the non-exclusive license, DuPont will make four annual fixed
royalty payments totaling $802 million during the 2014-2017 period for use of
Monsanto's RoundUp Ready 2 and dicamba tolerance traits. Beginning in 2018,
DuPont will make per unit royalty payments to Monsanto, subject to annual
minimum payments totaling $950 million from 2018-2023. Further, Monsanto will
have use of certain DuPont disease resistance technology and corn defoliation
patents.

The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article, which may include hyperlinks to
companies and current ratings, can be accessed at www.fitchratings.com. All
opinions expressed are those of Fitch Ratings.

Additional information is available on www.fitchratings.com

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