Making the Most of Joint Ventures Farmer Cooperatives Conference Mike Jackson December 6, 2010

Agenda 2 JV Overview Why a JV? Your “Dream” JV Partner Profile Selecting a JV Partner Structure and Execution Best Practices for Venture Success

Joint Venture (JV) Over view 3

JV Overview Strategic alliance between two or more entities Various legal structures Based on a specific business/project Common goals and objectives Specific purpose and duration Share risks and rewards Financial, intangible, management and control Protects core asset ownership Contractual agreements: create and unwind 4

Why a JV? 5

Fundamentally, expand/grow volume/profits Extend or maintain market position Strengthen R&D/innovation Improve distribution channels Generate economies of scale Diversify product offerings Improve competitive position Enter related businesses or new geographic markets Spread risk (mainly on large investments) 6

Carefully Consider JV Pro’s and Con’s 7 Advantages Flexibility: limited life span and specific roles reduce commitment and business exposure Divesture: creative way for companies to exit non-core businesses Acquisition: prelude to an eventual acquisition or cut its losses if the expected synergies do not materialize Disadvantages Failure: Historically, JV’s have a high failure rate Reputation risks: Partner’s actions can adversely affect the reputation of the JV and the parent companies Market Sharing: Less costly than acquiring but must also share profits Competitive Risks: Possible creation of a serious competitor

Your “Dream” JV Partner 8

Selecting a JV Partner Most often, the ideal JV partner has complementary resources, skills and assets Most important, look for cultural fit:  Company performance  Collaborative attitude and level of commitment  Trustworthiness  Complementary brand values  Reputation with Customers and Suppliers  Finances and credit  Existing JV/partnerships  Management team/philosophy 9

Structure and Execution 10

Tax and liability issues drive JV structure 11 Commonly used JV structures: 1.Corporations 2.General Partnerships 3.Limited Partnerships 4.Limited Liability Company Each is appropriate in a given situation

The JV agreement must detail venture expectations and goals! Scope and purpose of the JV Identification of the participants Identification of the business enterprise and its intended scope Term of the agreement Capital contributions/calls Technology/IP contributions and related protective clauses Accounting methods Management of the business Administrative matters Confidentiality agreements/ Non-Compete Agreements Dissolution terms 12

Dissolution Considerations 13

When to Unwind a JV An unrecoverable breach of the joint venture agreement Extended failure to meet business objectives Achieving the core purpose for the venture Purpose for the JV/partner goals change Disagreement on fundamental management issues Cultural and management style clashes Lack of leadership or commitment Inadequate capitalization by one or both partners Insolvency of one of the partners 14

Plan the Divorce Before the Wedding! The JV agreement must clearly specify the grounds for termination, the rights of each partner in the event, mode of dissolution and dispute resolution. Items to be resolve during a JV dissolution: Distributions: Share Capital/Technology/IP Transfer of Ownership: Put/Call Rights, Right of First Offer/Refusal Dispute Resolution: Mediation/Litigation/Arbitration Cost and Termination Fees Termination of licenses and other intra-corporate agreements Regulatory Considerations 15

Best Practices for JV Success 16 Establish clear, strategic leadership Detailed plan for operations, resources and contingencies Objectives are clear, communicated and relevant Align partner objectives/expectations Balance levels of expertise, investment or assets brought into the venture by the different partners Integrate cultural and management styles Create a atmosphere of cooperation Be flexible, recognize inevitable venture evolution Evaluate success on more than the numbers

Recent JV Agreements 17

Examples of Recent Joint Ventures Local and Regional Cooperatives BASF and Monsanto announced an expansion of their existing biotechnology research collaboration, including to work on biotech wheat - July 2010 Mexico’s Modelo in joint venture with Cargill to supply barley - April 2010 Phytogen Cottonseeds- JV between Dow Agro Sciences and J.G. Boswell Company, a world-class cotton producer based in California AGCO Corp. announced that it has signed a letter of intent to form a joint venture with Amity Technology, LLC for the development and distribution of air seeding and tillage equipment – November

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