Hey guys! Wake up!
DuPont to Pay Buy Out Pioneer Hi-Bred for $40-Share to Boost Seed Business
DuPont to Buy Rest of Pioneer Hi-Bred for $40-Share (Update1)
(Adds details, analyst comment beginning in 5th paragraph.)
Wilmington, Delaware, March 14 (Bloomberg) -- DuPont Co.
agreed to buy the 80 percent of Pioneer Hi-Bred International
Inc. that it doesn't already own for about $40 a share in cash
and stock to boost its agricultural business, people familiar
with the agreement said.
The transaction is valued at about $7.6 billion based on the
190.5 million shares outstanding that DuPont doesn't now hold.
DuPont, the biggest U.S. chemical company, bought a 20 percent
stake in Pioneer Hi-Bred, the world's largest seed-corn company,
for $1.7 billion in 1997. An announcement is expected as early as
Monday.
Officials at Wilmington, Delaware-based DuPont declined to
comment, while Pioneer Hi-Bred weren't immediately available.
The companies Friday said they were in talks about a
combination. Pioneer Hi-Bred shares rose 9 13/16, or 40 percent,
to 34 5/16, while DuPont fell 3/8 to 57 3/4.
DuPont last week renewed its drive to expand its life
science businesses, such as drugs and agricultural products, when
it announced it will form alliances and issue a separate class of
life-sciences stock.
Pioneer Hi-Bred generated $1.8 billion in sales last year
from corn, soybean and other hybrid seeds. The Des Moines, Iowa-
based company's shares sagged recently as seed prices fell.
''Pioneer's management realizes that the stock hasn't done
well the past year and the window of opportunity for getting
reasonable value for the franchise is closing,'' said Paul
Leming, an analyst at HSBC Securities.
DuPont's existing 20 percent interest in Pioneer Hi-Bred is
represented by 49.3 million Class B shares. The companies are
currently in a biotechnology venture called Optimum Quality
Grains.
Market Share
DuPont has been losing market share in its agricultural unit
to Monsanto Co.'s Roundup herbicide, which can be sprayed over a
growing crop if farmers use genetically altered Roundup-Ready
seeds. Competition from Roundup contributed to a 29 percent drop
in DuPont's fourth-quarter earnings from agricultural products.
Monsanto also recently held preliminary talks with DuPont
about a business combination, according to a person close to the
negotiations.
DuPont's tracking-stock plan comes about a year after the
company said it would increase its focus on life sciences, which
are generally faster growing than its traditional chemicals
businesses. The new class of shares could be used as currency in
mergers and joint ventures, DuPont said last week.
Pioneer is attractive to anyone else trying to reach farmers
because of its marketing network, said Frederic Russell of
Frederic E. Russell Investment Co., in Tulsa, Oklahoma, which
owns about 90,000 Pioneer shares.
----------------------------------------------------------------------
How much you think a European concern would pay for ABTX?
|
