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To: Anthony Wong who wrote (166)	6/2/1998 3:21:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 1722

American Home, Monsanto Fall as Merger Makes Buyouts Unlikely Bloomberg News June 2, 1998, 11:01 a.m. PT American Home, Monsanto Fall as Merger Makes Buyouts Unlikely Madison, New Jersey, June 2 (Bloomberg) -- American Home Products Corp. and Monsanto Co. shares fell as their planned $34 billion merger makes it unlikely that either maker of drugs and agricultural products will be bought by another company. American Home, maker of the painkiller Advil and Centrum vitamins, fell 1 7/8 to 47 3/8 in midafternoon trading. It earlier touched 46 3/4. Monsanto, whose products include the artificial sweetener Nutrasweet, fell 2 1/16 to 52 7/16. The merger of American Home and Monsanto will give the new company more money to spend on research and development and a larger sales staff to sell drugs, such as a potential blockbuster arthritis drug Monsanto is developing, analysts said. Still, many investors had hoped larger rivals might have been willing to buy each of these companies and pay shareholders a premium. ''It's kind of the dust settling,'' said William Fiala, an analyst with Edward Jones. ''There had been some takeover premium for both companies.'' In January, American Home confirmed that it was in talks with rival drugmaker SmithKline Beecham Plc. Those talks ended in late January. DuPont Co. and even Pfizer Inc. had been suggested as buyers for Monsanto before American Home and Monsanto announced their agreement yesterday. Fiala said he raised his rating on Monsanto to ''buy'' from ''hold'' after yesterday's announcement. He already had a ''buy'' rating on American Home, he said. Under the agreement, American Home will swap 1.15 of its shares for each Monsanto share. American Home shareholders will own 65 percent of the new company, which will have annual sales of $23 billion. The companies are betting that genetic technology will join the production of feed, food and pharmaceuticals in an industry loosely defined as life sciences. Monsanto spun off its chemicals last year to focus on drugs and agricultural biotechnology. American Home, which also makes herbicides, needs more drugs to sell after withdrawing its obesity drugs over health concerns. Adding Monsanto to Madison, New Jersey-based American Home could decrease American Home's earnings by up to 15 percent in the first year after the transaction is completed, the companies said. It will decrease them by a lesser amount in 2000 and then add to earnings, they said. They expect annual savings of as much as $1.5 billion within three years of the closing. The transaction is expected to be completed by the end of the year. --Kerry Dooley in the Princeton newsroom (609) 279-4016/dd