UPDATE 1-Monsanto to buy vegetable seed company

(Adds details, background, byline; Changes dateline, previously NEW YORK)

By Carey Gillam

KANSAS CITY, Mo., March 31 (Reuters) - Monsanto Co (MON.N: Quote, Profile, Research) on Monday said it has agreed to acquire Netherlands-based De Ruiter Seeds Group B.V., which operates De Ruiter Seeds, for $860 million (546 million euros), to expand the agricultural biotech company's presence in the vegetable seeds business.

St. Louis-based Monsanto said it will finance the acquisition with cash, and the deal should boost Monsanto's earnings and revenue by the second full fiscal year following closure of the acquisition.

The companies did not announce a time frame for closing the deal because of regulatory clearance requirements.

The move comes three years after Monsanto began aggressively moving into the vegetable seed arena with the $1.4 billion purchase in 2005 of California-based Seminis, which gave Monsanto control over more than 30 percent of the North American vegetable seed market, as well as more than 20 percent of the world's tomato seed market and more than 30 percent of the global hot pepper seed market.

Last year, Monsanto formed the International Seed Group Inc (ISG) as a holding company for the company's growing investments in regional vegetable and fruit seed businesses.

Unlike the Seminis business, which is primarily directed at the open-field vegetable market, the bulk of De Ruiter's business is for greenhouse growers, known as the "protected culture market," which Monsanto said is the fastest-growing area of the vegetable seed industry today.

Monsanto said the sector had an estimated compound annual sales growth rate of 8 percent to 10 percent over the next five years, with more than $600 million in sales worldwide in 2007.