Monsanto Co. announced preliminary plans Wednesday for a potential $1 billion-plus expansion of its Luling plant.
The project, if it goes forward, would create 95 direct jobs averaging $76,500 per year plus benefits. The Luling plant already has 645 workers.
A final investment decision is expected in early 2016. The expansion would take three to five years and allow the plant to produce more dicamba, an herbicide used in protecting crops. Monsanto is targeting dicamba-based Roundup Ready Xtend Crop System products for initial use in soybean and cotton crops.
“Our Luling facility is a logical site uniquely positioned at the center of Monsanto’s manufacturing network, with convenient access across the Americas where the Roundup Ready Xtend Crop System has a fit,” Chief Operating Officer Brett Begemann said.
Louisiana Economic Development estimates the project would result in an additional 450 new indirect jobs in the state. Monsanto estimates development of the project would generate 1,000 construction jobs at peak building activity.
To secure the project, Louisiana offered Monsanto a performance-based Modernization Tax Credit of $5 million, along with a performance-based $1.7 million Economic Development Award Program grant to reimburse rail and electrical infrastructure costs associated with the proposed expansion. In addition, Monsanto is expected to use Louisiana’s Quality Jobs and Industrial Tax Exemption programs.
Monsanto’s expansion would be the latest in a series of recent expansion projects related to the company’s St. Charles Parish operations. In March 2010, the Luling site completed a $196 million expansion that resulted in 26 new direct jobs. Within the past five years, Air Products and Hexion have built production facilities at the Luling site to supply raw materials to support Monsanto’s operations.
The Luling investment was part of Monsanto’s third-quarter earnings report.
Monsanto Co. reported better-than-expected earnings results for the third quarter as executives of the huge agricultural business continued to make a case for a $45 billion takeover of Swiss competitor Syngenta AG.
St. Louis-based Monsanto reported earnings of $2.39 per share on stronger revenue from crop chemicals, compared with results of $1.62 per share in the prior-year period.
The average estimate of eight analysts surveyed by Zacks Investment Research was $2.05 per share.
But Edward Jones analyst Matt Arnold said the earnings gain was driven by a one-time licensing payment from Scotts Miracle Gro, which sells Monsanto’s signature weed killer Roundup to consumers.
“The company’s underlying operating performance was more mixed,” Arnold said. He noted that Monsanto maintained its full-year earnings guidance at the lower end of its range of $5.75 to $6.
Monsanto reiterated its goal to more than double its 2014 earnings per share by 2019, emphasizing the potential benefits of a combination with Swiss chemical maker Syngenta, which has three times rejected its unsolicited offers.
“Our proposal to combine with Syngenta is an exciting logical next step for our business, offering the opportunity to accelerate innovation and support a more diverse group of farmers around the world,” CEO Hugh Grant said.
Syngenta provided a more detailed explanation this week of its concerns with Monsanto’s takeover offer. In a video posted to its website, Chairman Michel Demaré said the offer undervalues the pesticide-maker’s business, which “they are trying to buy on the cheap.” He also reiterated concerns that Monsanto is underestimating antitrust challenges.
Monsanto tried to sweeten the offer for shareholders earlier this month, adding a $2 billion guarantee should the proposal fall apart. Syngenta said the proposal remains “inadequate.”
Basel-based Syngenta is the world’s largest crop chemical producer, and its acquisition would help Monsanto diversify its offerings beyond Roundup. Sales of that chemical have been hurt in recent months by concerns about its safety when used in large-scale industrial farming.