GENTECH archive 8.96-97
Monsanto To Buy Out Calgene
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- Subject: Monsanto To Buy Out Calgene
- From: Purefood@aol.com
- Date: Fri, 4 Apr 1997 06:29:45 -0500 (EST)
(New throughout, adds company, analyst comment; changes dateline, pvs St.
By Patricia Commins CHICAGO, April 1 (Reuter) - Monsanto Co., in a
move to expand its biotechnology and food science businesses, said Tuesday it
agreed to acquire the remaining shares of Calgene Inc. that it does not own
for $240 million.
Monsanto, which owns 54.6 percent of Davis, Calif.-based Calgene, said it
offered to buy the rest of the company for $8 a share, an increase from its
previous offer of $7.25 a share.
For Monsanto, owning all of Calgene underscores its plans to bring
biotechnology further up the food chain, observers said.
Monsanto is currently involved in agricultural biotechnology, developing
genetically altered crops that can fight off insects and withstand the use of
certain herbicides in the field. This kind of biotechnology is aimed at
helping farmers increase their yields.
With the most recent deal, Monsanto gains further access to Calgene's
research in producing genetically modified oils, fresh produce and cotton --
products used by consumers. Natwest Securities analyst Mark Wiltamuth called
this the "second wave of agricultural biotechnology."
Monsanto has been transforming itself into a life sciences company, with
agricultural, food ingredient and pharmaceutical holdings, and plans to spin
off its chemical businesses later this year.
"This will promote the closer working relationships and the greater
sharing of technologies that are only possible with full ownership of the
company," Monsanto Executive Vice President Hendrik Verfaillie said in a
statement. "We can now better realize the benefits from Calgene's research by
combining our technology efforts and bringing products to market more
Calgene Chairman Lloyd Kunimoto said much of his company's research has
focused on using genetic engineering to produce oils that may be healthier
"Our strong suit is using genetic engineering to modify oil composition,"
said Kunimoto, who will stay on with Calgene as it becomes part of Monsanto.
Calgene's "flagship product," Kunimoto added, is a modified canola oil
that contains at least 40 percent of a fatty acid called laurate, which is
typically found in tropical crops like coconuts.
While this gives the laurate canola certain properties similar to cocoa
butter, Kunimoto said it does not promote cholestrol in the body, a criticism
of tropical oils.
Calgene's other biotech products include fresh tomatoes and strawberries
with improved flavor and shelf-life, naturally colored cotton fibers and
herbicide-tolerant and insect-protected cotton.
Moving into the genetically modified food arena is not without its risks,
since many consumers harbor fears and doubts about the safety of these
products, said Teresa Thiel, professor of biology and director of
biotechnology at the University of Missouri.
"We as consumers are very concerned about the quality of the food and the
content of the food," Thiel said, pointing to recent protests in Europe over
genetically altered crops such as Monsanto's Roundup Ready soybeans, which
can withstand use of the Roundup herbicide.
Monsanto said it will commence a tender offer for the remaining Calgene
shares on April 7. It took an initial 49.9 percent stake in Calgene in March
1996 and purchased an additional 6.25 million shares for a 54.6 percent stake
in November 1996.
In January, it proposed acquiring the rest of Calgene for $7.25 a share.
The revised bid of $8 a share was approved by a special committee of
Calgene's directors who are neither designees of Monsanto nor Calgene
The two companies also agreed in principle to settle putative class
actions that were filed after Monsanto's initial $7.25 a share offer.
Kunimoto said he believed the $8 a share price for his company's stock
will give shareholders "a fair premium on their investment."