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7-Misc: Pioneer says DuPont was in talks to buy Monsanto



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TITLE:  Pioneer says DuPont was in talks to buy Monsanto
SOURCE: Reuters, by Emily Kaiser
DATE:   July 2, 1999

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Pioneer says DuPont was in talks to buy Monsanto

CHICAGO, July 2 (Reuters) - Chemical giant DuPont Co. had been in
talks to buy life sciences firm Monsanto Co., but dropped the
plans after seed maker Pioneer Hi-Bred International Inc.
objected, Pioneer said in a regulatory filing on Friday. Pioneer,
which is a key competitor with Monsanto, said DuPont informed it
of its plans to acquire Monsanto on Jan. 4, 1999, Pioneer said in
the filing with the U.S. Securities and Exchange Commission. At
that time, DuPont owned 20 percent of Pioneer's stock. DuPont
agreed on March 15 to acquire Pioneer for $7.7 billion. There had
been widespread rumors earlier in March that DuPont planned to
acquire Monsanto.

On Jan. 6, Pioneer's chairman, Charles Johnson, "stated that if
DuPont proceeded to combine with Monsanto, the relationship
between DuPont and Pioneer would likely be negatively affected,"
Pioneer said in the filing. Pioneer was concerned that if DuPont
were to acquire Monsanto, it would have to sell its stake in
Pioneer to satisfy antitrust concerns. Pioneer is the largest
U.S. seed company and Monsanto is the second largest. Also,
Pioneer was suing Monsanto at the time over rights to certain
crop genetics. "As an alternative to the termination of their
relationship, Mr. Johnson suggested the possibility that, before
combining with Monsanto, DuPont first acquire the remaining
interest in Pioneer not owned by DuPont," Pioneer said in the
filing. A spokeswoman for DuPont declined to comment. A Monsanto
spokeswoman could not immediately be reached.

DuPont and Pioneer met repeatedly over the next two months, and
haggled over price and other terms, the filing shows. DuPont
Chairman Charles Holliday initially considered a price in the
range of $30 to $35 a share, which was below the final agreement
of $40 a share. "DuPont and Pioneer continued to differ as to the
appropriate valuation of Pioneer," the filing said, referring to
the Jan. 25, 1999 to Feb. 24, 1999 time period. As the talks
continued, DuPont puts its discussions with Monsanto on hold, but
said it was prepared to resurrect them if negotiations with
Pioneer broke down, Pioneer said. "DuPont on several occasions
expressly stated that, unless substantial progress was being made
in discussions between DuPont and Pioneer, DuPont was prepared to
proceed with further discussions with Monsanto," according to the
Pioneer filing.

In the last stages of discussions, the DuPont and Pioneer agreed
that if DuPont entered into any transaction with Monsanto before
the Hart-Scott-Rodino waiting period expired, Pioneer would be
permitted to seek a court order requiring DuPont to abandon the
Monsanto deal. Pioneer would also be entitled to repurchase
DuPont's 20 percent stake in Pioneer at $8.58 a share, 25 percent
of its closing price on March 12. The waiting period ended on May
21. On Friday, shares of Pioneer were up 1/16 at 38-3/4, while
DuPont's stock was up 7/8 at 70-5/8. Monsanto's shares were up 1
2 at 42-5/8. 



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