ST. LOUIS and PEAPACK, N.J., Dec. 19 /PRNewswire/ -- Monsanto Company
(NYSE: MTC) and Pharmacia & Upjohn (NYSE: PNU) today announced that they have
entered into a definitive agreement to create a dynamic and powerful new
competitor in the global pharmaceutical industry. The new company will have
one of the strongest sales forces in the global pharmaceutical industry, an
expansive product portfolio, a robust pipeline of new drugs, including a
number with blockbuster potential, and an annual pharmaceutical R&D budget of
more than $2 billion. The new company also will have one of the world's
leading fully integrated agricultural businesses. The combined company will
have estimated 1999 sales of $17 billion with a market capitalization of more
than $50 billion.
The combined company, as yet to be named, will have a significantly
strengthened position in the critical U.S. pharmaceutical market and
complementary current and near-term products in key therapeutic areas. It
will have a leading sales force in the critical U.S. pharmaceutical market,
which will account for more than 50 percent of the company's global
The agricultural business has a leading global position in seeds,
herbicides and biotechnology traits. In conjunction with the creation of the
new company, it is expected that up to 19.9 percent of the agricultural
business will be offered in an Initial Public Offering (IPO). The
agricultural business will become a separate legal entity, with a stand-alone
board of directors and its own publicly-traded stock upon completion of the
Leading the combined organization as President and Chief Executive Officer
will be Fred Hassan, the current CEO of Pharmacia & Upjohn. Hassan will also
have operational responsibilities for the new company's core pharmaceutical
business. Monsanto Chairman and CEO Robert B. Shapiro will become the
non-executive Chairman for a period of 18 months, after which he will be
succeeded by Hassan.
The new company's corporate headquarters will be located in Peapack, N.J.,
along with the pharmaceutical business. The new company's agriculture
business will be headquartered in St. Louis.
Under the terms of the merger-of-equals transaction, which has been
unanimously approved by both boards of directors, Pharmacia & Upjohn
shareowners will receive 1.19 shares of the combined enterprise for each share
of Pharmacia & Upjohn they now hold. Each Monsanto share outstanding prior to
the combination will represent one share in the combined company. The
transaction will be tax-free to the shareowners of both companies and is
expected to be accounted for as a pooling of interests. Monsanto shareowners
would own approximately 51 percent of the combined company's shares.
Driven by top-line synergies, the new company is expected to achieve a
higher earnings level than either company on its own. In addition, the new
company plans to achieve annualized synergies of more than $600 million
consisting of cost avoidance and elimination of duplication, some of which may
be reinvested to accelerate growth opportunities.
Commenting on the transaction, Mr. Shapiro said: "The new company is
being created from two rapidly growing organizations with strong global
capabilities. It is a merger driven from strength, and will have the
appropriate scale and resources to capture the full value of its growth
potential. We'll also be achieving significant synergies as we combine
two technology-driven, market-leading businesses. The new company has a
strong management structure. Fred Hassan is a proven CEO, and I'm confident
he will bring the same dynamism and focus on shareholder value to the new
company that he brought to Pharmacia & Upjohn."
Said Mr. Hassan: "This is a combination designed to achieve both business
growth and enhanced shareholder value over the near and long term. We are
creating a high-growth pharmaceutical company with a global leadership in
sales and marketing, a superior R&D platform, and top-tier growth prospects,
including several products with blockbuster potential. At the same time, we
are establishing a structure which gives our agricultural operations the scope
and autonomy to be a leading independent entity in the agricultural field with
high growth opportunity supported by a strong capital structure and the
potential for direct shareholder investment."
The new company's growing pharmaceutical business will be led by Celebrex,
an innovative new treatment for arthritis launched in 1999 with sales to date
of $1.4 billion; Xalatan, the world's top selling prescription medication for
glaucoma; Detrol, the leading treatment for over-active bladder; Camptosar, a
treatment for colorectal cancer; and Zyvox, a revolutionary new antibiotic
expected to be launched in 2000.
The new company has strong positions in a number of therapeutic areas,
including arthritis and inflammation, antibiotics, oncology, cardiovascular,
central nervous system, ophthalmology, urology and women's health. The
company also has a strong consumer healthcare business led by key global
brands, including the Nicorette family of tobacco-dependency products and
Rogaine/Regaine, a treatment for hair loss.
The combined company's board of directors will consist of 20 members, with
representation equally divided between Monsanto and Pharmacia & Upjohn.
Planned key appointments include that of Monsanto's Richard U. De Schutter, as
Senior Executive Vice President; Pharmacia & Upjohn's Christopher Coughlin, as
Executive Vice President and Chief Financial Officer; Monsanto's Philip
Needleman, Ph.D., as Chief Scientific Officer; and Monsanto's
Hendrik A. Verfaillie as CEO of the agricultural business. Further
appointments will be announced during the course of the merger integration
The transaction is expected to close in the second quarter of 2000,
subject to approval by both companies' shareholders, normal governmental
reviews and other customary conditions.
This news release contains certain forward-looking statements, including,
among other things, statements regarding each company's results of operations
and expected cost savings and earnings per share effects. These
forward-looking statements are based on current expectations, but actual
results may differ materially from anticipated future events or results.
Certain factors which could cause each company's actual results to differ
materially from expected and historical results are described in Monsanto's
and Pharmacia & Upjohn's periodic reports filed with the Securities and
Exchange Commission, including Monsanto's and Pharmacia & Upjohn's 1998 annual
reports and Forms 10-K and Exhibits 99 thereto, respectively.
This announcement is not an offer to sell nor a solicitation to buy any
securities. The offering with respect to the proposed merger will be made
only by the proxy statement/prospectus that will be distributed to shareowners
in connection with their consideration of the transaction.
SOURCE Monsanto Company