Monsanto Co. plans to divest its Posilac dairy hormone business to focus on genetically modified crops, Bloomberg News reported.
The synthetic hormone, which is given to dairy cows to boost milk production, will be sold in the coming months, Creve Coeur-based Monsanto said Wednesday in a statement. Monsanto, the world’s biggest seed producer, has sold Posilac, also known as recombinant bovine somatotropin, or rBST, since 1994. The company doesn’t detail Posilac sales or profit, spokeswoman Danielle Jany said.
Chief Executive Hugh Grant is selling smaller, animal-agriculture units amid surging sales of crop products such as Roundup herbicide and engineered corn and soybean seeds. Monsanto in September sold its Choice Genetics unit, which mapped swine genes.
“There are certainly advantages to not being distracted from the core business,” Laurence Alexander, a New York-based analyst at Jefferies & Co., said in a telephone interview. He rates the shares “buy.”
Posilac boosts the average co’s milk production by about 10 pounds a day, or about 15 percent, Jany said. The company failed in an attempt last year to stop dairy processors such as Dean Foods Co. from labeling milk as free of Posilac. “That hasn't been a factor in making this decision,” Jany said. “We are focusing on our core seeds and traits business.”
Monsanto has said labeling milk as being free of bovine-growth hormone incorrectly suggests the government-approved supplement used on about one-third of U.S. dairy herds may cause health problems. Such labels don't mislead consumers about the product's safety, the Federal Trade Commission said last August.
Monsanto shares rose $2.45, Wednesday, or 2.3 percent, to $109.40 in New York Stock Exchange composite trading. The shares have fallen 2.1 percent this year.