GENET archive


7-Business: Pharmacia seen spinning off Monsanto

genet-news mailing list

-------------------------------- GENET-news --------------------------------

TITLE:  Pharmacia seen spinning off Monsanto
SOURCE: Reuters,
DATE:   November 12, 2001

------------------ archive: ------------------

NEW YORK, Nov 12 (Reuters) - Pharmacia Corp. (NYSE:PHA - news) will likely 
spin off Monsanto Co. (NYSE:MON - news) to shareholders next spring as the 
drug company seeks to rid itself of its volatile agricultural business, 
analysts said. Pharmacia completed its acquisition of Monsanto in March 
last year. Its aim was to gain access to Monsanto's drug unit, which 
developed the blockbuster arthritis drug Celebrex. Under the transaction, 
however, Pharmacia also acquired the agricultural business.

The requirement to hold on to Monsanto ends in March 2002, and analysts 
believe Pharmacia will waste no time in getting rid of a business which 
develops genetically enhanced crops and whose main product is Roundup 
herbicide. Pharmacia has already sold off 15 percent of Monsanto. "We 
expect that Pharmacia will sell or spin off the remaining 85 percent of 
Monsanto that it owns," said Jami Rubin, an analyst at Morgan Stanley. "A 
significant portion of Pharmacia earnings uncertainty comes from the ag 

Pharmacia, which declined to comment on its plans for Monsanto, has 
nonetheless made no bones about its lack of interest in the agricultural 
business. In the third quarter the company said Monsanto shaved 3 cents 
from its earnings per share. "Pharmacia makes clear that they are first and 
foremost a drug company," said Steve Scala, an analyst at SG Cowen 
Securities Inc.

Peapack, New Jersey-based Pharmacia will most likely spin off Monsanto to 
shareholders, analysts said. That's because Pharmacia is unlikely to find a 
buyer for Monsanto, which has a market value of $7.9 billion. "Monsanto's 
too expensive," said William Young, an analyst at Credit Suisse First 
Boston, though he added that "you can never rule anything out." Monsanto 
executives were not immediately available for comment. The company's shares 
were down 53 cents, or 1.8 percent, at $29.43 in late Monday trading on the 
New York Stock Exchange. Pharmacia's shares are currently trading at about 
$40.00, of which about $5.00 is accounted for by the agricultural business, 
analysts said. In the event of a spinoff, Pharmacia shareholders would 
receive a dividend or coupon for their Monsanto shares, to do with as they 

Analysts said it would be bad for Pharmacia if shareholders didn't sell 
their Monsanto stock, as it is that part of the business that is hurting 
Pharmacia. "Investors buy Pharmacia because they want the visibility and 
earnings stability of a pharmaceuticals company," said Rubin. The 
agricultural business is far more volatile.


|                   GENET                     |
| European NGO Network on Genetic Engineering |
|                                             |
|             Hartmut MEYER (Mr)              |
|               Kleine Wiese 6                |
|           D - 38116 Braunschweig            |
|                 Germany                     |
|                                             |
| phone: +49-531-5168746                      |
| fax:   +49-531-5168747                      |
| email:                    |