Monsanto buys Climate Corporation for $930m

Monsanto (MON) has agreed to acquire the Climate Corp. for $930 million. The real stunner of a deal marks one of the largest buys of a new-era data analytics company. Climate Corp. was founded in 2006 under the name Weatherbill by a pair of Google (GOOG) engineers who wanted to capitalize on the world’s increasingly unpredictable climate. The new company offered insurance against weather-related incidents such as a rainout at the U.S. Open tennis tournament or a concert cancelation. As time went on, the company settled on a business model that revolved around providing a new type of insurance for farmers.

Historically, farmers have relied on federal crop insurance to protect them against the costs of their inputs—fertilizer, seed—during hard times. This setup, though, leaves farmers at a break-even point and does not address the profit they may have made from the crop. The Climate Corp. stepped in to offer insurance that would cover the profit, and it did so in a very innovative way. The startup turned the U.S. into a grid and used weather data to measure temperature and rainfall and other factors. If a farmer bought a policy that covered drought and his land didn’t receive the specified amount of rain covered by the policy, he was paid out automatically by Climate Corp. based on the measurements—no need to file a claim.

Source: bloomberg

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