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7-Misc: DuPont buying Pioneer Hi-Bred, leaving rival Monsanto out in the cold



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DuPont in $7.7B seed deal
Chemical firm buying Pioneer Hi-Bred, leaving rival Monsanto out in the 
cold
March 15, 1999

NEW YORK (CNNfn) - DuPont Co. said Monday it will pay $7.7 billion for 
the rest of Pioneer Hi-Bred International, the world's biggest seed 
company, pushing further into biotechnology and dealing a major blow to 
rival Monsanto.
DuPont said it will pay $40 a share in cash and stock for the 80 percent 
of Pioneer it doesn't already own, seeking to boost sales of the 
genetically engineered seeds that are changing the way farmers in the 
United States grow crops. Genetically modified food and crops are facing 
greater resistance from consumers -- and scrutiny from regulators -- in 
Europe.
DuPont said Pioneer will keep its name and headquarters in Des Moines, 
Iowa, and that the deal will reduce its earnings per share by about 7 
percent in 2000, the first full year of combined operations.
Pioneer stock jumped 3-3/4 to 38-1/16 after soaring last week on 
speculation about a deal, while DuPont fell 1-3/8 to 56-3/8, reflecting 
concerns about earnings dilution.
 Pioneer (PHB) and Monsanto (MTC), bitter rivals in the seed market, are 
key distributors of the genes for modified crops developed by DuPont, 
Germany's Hoechst and other big chemical companies.
 Monsanto said this month it was in early-stage merger talks with DuPont, 
according to published reports, but some observers said the companies 
have different cultures that wouldn't be a good fit. Monsanto fell 3/16 
to 48-1/2.
DuPont said last week it was seeking alliances with big drug makers and 
would issue a new class of stock for its life-sciences business to use as 
currency in an acquisition.
 DuPont Chairman Charles Holliday Jr. said Monday the deal will make the 
combined company a leader in gene-crop technology and foster products 
that aren't even on the drawing boards today.
"This is very early in this industry," Holliday told CNNfn. "It's like 
that first telephone call -- try to imagine the cell phones (of) today. 
We don't know exactly how it will play out, but we know the technology is 
powerful."
Pioneer Chief Executive Charles Johnson said the deal is a result of the 
two companies' work together over the past 18 months. "Our cultures fit, 
our visions fit, our sense of the future fits and our strengths, research 
and otherwise, fit, so it seemed like the natural thing to do."
DuPont's life-sciences business had sales of $4.3 billion last year, or 
about 17 percent of total sales of $25.8 billion. The businesses include 
crop protection, nutrition and health, the 20 percent of Pioneer owned 
since September 1997, and biotech research operations.
DuPont wants to boost earnings from biotech over the next five years from 
about 15 percent of its operating income last year, excluding one-time 
items. The company's biggest businesses are chemicals, fibers and 
polymers, or specialty chemicals.
The moves come as DuPont, founded in 1802 as a maker of black blasting 
powder, is trying to wean itself away from bulk commodity chemicals, 
where sales depend on economic cycles and often rely heavily on 
price-cutting.
Monsanto had been courting DuPont as a merger partner after incurring 
heavy debts in its own aggressive moves into the biotech sector. Monsanto 
CEO Robert Shapiro had touted the move as a way to fight the European 
chemical giant being created by the proposed merger of Hoechst and 
France's Rhone-Poulenc. 


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