The deal, probably the first major acquisition by the Monsanto group in the country in the recent past, will see Mahyco promoters, the Barwales, divest 16 per cent of their equity holding for approximately Rs 112 crore. The closely-held Mahyco is the market leader in the hybrid-seeds segment. Sources say the remaining 10 per cent equity stake will be picked up through a fresh equity issue of around Rs 70 crore. The acquisition will be routed through Monsanto India, the group's holding company, which is wholly held by the American parent. Sources say the Foreign Investment Promotion Board (FIPB) has already cleared Monsanto's planned investment. The company is in the processof obtaining the Reserve Bank's approval for the move. Monsanto and Mahyco have already formed a 50:50 joint venture, Mahyco Monsanto Biotech, to introduce a new insect-tolerant cotton variety in the country. The variety, Bollgard, has the potential to increase cotton productivity by close to 20 per cent, and an experimental launch has been slated for next year. Monsanto's foothold in Mahyco, analysts say, is expected to boost the local company's research and development efforts significantly, given the multinational's technological expertise.

Monsanto recently set up a $25-million R&D centre in Bangalore, which will be the hub of its research activities in Asia. The centre will focus on genomics, bio-informatics and transformation.

Monsanto has over 1,000 scientists, researchers and specialists working towards developing sustainable agricultural technologies in over 100 nations across the globe.

Mahyco employs approximately 130 scientific staff at nine research stations and has over 20 research farmsall over the country. It is also on course to setting up a new hi-tech R&D unit. The Monsanto group operates through three companies in the country: Monsanto India, held 100 per cent by Monsanto, USA; Monsanto Enterprises, a 100 per subsidiary of Monsanto India; and Monsanto Chemicals, a 40 per cent subsidiary of Monsanto, USA.

Monsanto's acquisition in Mahyco comes at a time when the multinational is in negotiations with RPG group firm Searle India to forge a joint venture in the pharmaceuticals business. Monsanto's pharmaceutical subsidiary, GD Searle & Co, US, already has a licensing agreement (now extended till December 31, 1998) with Searle India. Monsanto products account for close to 40 per cent of Searle India's turnover.

The multinational has also initiated plans to spin off its domestic industrial chemicals business into a separate company, Solutia, as part of a global restructuring effort. Globally, the spinoff has seen the formation of two separately-traded companies -- a life sciences firm(including the agricultural, food ingredient and pharma business) and a chemicals entity.The industrial chemicals business accounts for around 10 per cent of Monsanto Chemicals of India's turnover of roughly Rs 100 crore. Valuation details for the proposed spinoff are being worked out.