Monsanto in merger talks

17 December 1999

Monsanto ‘in merger talks’

By FWi staff

LIFE sciences giant Monsanto is reported to be in merger talks with pharmaceutical company Pharmacia & Upjohn Inc.

The I>Wall Street Journal says this is one of various options to boost shareholder value which Monsanto is considering.

The newspaper reports a deal would be a “so-called merger of equals” as Monsanto is valued at $26 billion (£16bn) and Pharmacia $28bn.

It is thought the boards of both companies will discuss a merger this weekend.

Monsanto has been considering whether to break up the company to free its high-flying pharmaceuticals business from its agriculture unit.

The biotechnology unit is besieged by protests and lawsuits against its genetically modified crops

Some Wall Street analysts say the agricultural business weighs down Monsantos value, and would only contribute $1bn to the $26bn market capitalisation of the whole company.

The Wall Street Journal says the board may still choose to shed the agricultural unit.

It speculates that Monsanto shareholders hoping for a break-up or spinning off, may be disappointed at a merger of equals which may not bring a substantial premium.

Under one scenario, if a deal does go ahead, Fred Hassan, Pharmacias chief executive, would be CEO of the combined company

Monsanto CEO Robert Shapiro, 61, would be the likely chairman of the combined company.

These talks come weeks after talks between Monsanto and Swiss life sciences giant Novartis.

Novartis and UK company AstraZeneca subsequently agreed to merge their agribusiness sectors to form a new company called Syngenta.

Last year, Monsanto walked away from a merger with American Home Products Corp.

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