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To: 2MAR$ who wrote (60394)	7/15/2002 4:31:48 PM
From: 2MAR$	Respond to of 208838

Monsanto stock slips on Pharmacia-Pfizer deal By Carey Gillam KANSAS CITY, Mo., July 15 (Reuters) - Shares of biotech agricultural company Monsanto Co. <MON.N> fell to a 52-week low on Monday before recovering after its parent, drugmaker Pharmacia Corp. <PHA.N>, agreed to be acquired by industry leader Pfizer Inc. <PFE.N>. Some industry analysts speculated that Pharmacia may be pressured to move up its planned spin-off of Monsanto, giving it less time to reestablish market confidence in its earnings after recent profitability problems. Pfizer, the world's largest drugmaker, said it had agreed to buy its U.S. rival Pharmacia for about $51 billion in stock, representing about a 20 percent premium for Pharmacia shares. Pfizer's plan to complete the Pharmacia acquisition by year's end could speed up the spinoff of Monsanto shares, which was originally slated to happen in the fourth quarter of this year. Pfizer has said the mega-merger is contingent on Monsanto shares already being spun off. Pharmacia said Monday it would spin off Monsanto "as soon as practicable this year," and it would not comment further. Stock in St. Louis-based Monsanto was already under pressure prior to the Pfizer deal on anticipation of the spinoff, which is to be handled as a tax-free dividend of Monsanto shares to Pharmacia shareholders. Market observers had speculated that Pharmacia shareholders could be quick to dispose of Monsanto stock following the spinoff. Now with Pharmacia moving to shed Monsanto before the Pfizer deal closes, there is less time for Monsanto to restablish confidence in its earnings after a recent profit warning. "Now it could be viewed more as a fire sale... to get it done quickly at any price," said Buckingham analyst John Roberts. Monsanto's stock sank more than 12 percent in early trading on Monday before closing off 58 cents, or more than 3 percent, at $16.99 on the New York Stock Exchange. In early trading on Monday, the stock hit a 52-week low of $15.30. Monsanto Chief Operating Officer Hugh Grant said Monday that he had no information about a change in timing of the spinoff. "I don't have a date," Grant said. "We've been preparing for the spinoff. We're getting ourselves organized here and we'd be ready to go." Monsanto, which in June sharply cut its earnings outlook through 2003, has been beleaguered of late by troubles in Latin America, increasing competition for its top-selling Roundup herbicide product, and problems gaining global acceptance of its genetically modified seed technology. Monsanto has been evolving from a company largely dependent on its crop productivity products to one driven by seeds and genomics technology. Analysts said Monsanto was seen as a leader in its key business lines, and pricing action Monday was at least in part tied more to arbitrage than concerns about Monsanto, which produces herbicides, seeds and other agricultural products. Monsanto is the "preeminent bioag company in the world," said Deutsche Bank analyst John Moten. The stock drop, he said, was much more "going long on Pharmacia and short on Monsanto." Grant said the blockbuster merger of the drug companies would have little impact on the fundamentals of the biotech agricultural concern. "In terms of how we run the business, I don't think it changes much," Grant said. "Pharmacia has been very, very good. We've reported in to the management structure there. They've said deliver on certain milestones and targets, but other than that they've pretty much let us run our own business." Pharmacia, which was then Pharmacia & Upjohn, merged with St. Louis-based Monsanto in April 2000. The drug company sold off 15 percent of Monsanto in a public offering in October 2000 and had planned to spin off the rest in the fourth quarter of this year. Pharmacia obtained the wildly successful Cox-2 inhibitor Celebrex drug through its purchase of Monsanto. The treatment for osteoarthritis and rheumatoid arthritis has been a key revenue driver for Pharmacia and is seen as one of the jewels driving the premium Pfizer is willing to pay for Pharmacia. ((Kansas City bureau, 913-663-2658, fax-913-663-2698, carey.gillam@reuters.com)) REUTERS * end of story *