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Biotech / Medical : Pharma News Only (pfe,mrk,wla, sgp, ahp, bmy, lly) -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (924)	10/14/1998 4:25:00 PM
From: Anthony Wong	Read Replies (3) \| Respond to of 1722

Monsanto Falls for 2nd Day on End of American Home Merger Plans Bloomberg News October 14, 1998, 3:35 p.m. ET Monsanto Falls for 2nd Day on End of American Home Merger Plans St. Louis, Oct. 14 (Bloomberg) -- Monsanto Co. shares fell as much as 6.4 percent amid concern about how one of the world's largest biotechnology companies will promote its drugs and manage its finances after ending a planned $35 billion merger with American Home Products Corp. Monsanto fell 2 1/2 to 34 1/2, a 52-week low, in midafternoon trading. Monsanto closed Monday at 50 3/8. American Home fell 1/4 to 44 3/4. Yesterday, it fell 5 to 45. Investors had looked to American Home's financial discipline and marketing muscle to make the most of Monsanto's promising new drugs and agricultural products. Monsanto has spent heavily on research into new, improved seeds that can better withstand insects and disease. ''Monsanto wasn't willing to accept the rigorous financial controls that American Home wanted to place on them,'' said Darrell Riley, an analyst at T. Rowe Price, which owns shares in both companies. ''It's like a child that won't take the medicine they need to get better.'' American Home, the world's seventh biggest drugmaker, is known for its strict cost controls. Led by John Stafford, the Madison, New Jersey-based company also knows how to promote its drugs effectively, especially in the arthritis market, analysts said. ''American Home is a machine,'' Riley said. ''They can squeeze dollars out of stones.'' Monsanto said it will continue its strategy of forming alliances with larger drugmakers instead of seeking a new merger partner. Agreement With Pfizer St. Louis-based Monsanto has an agreement with Pfizer Inc., considered one of the world's best drug marketers, to sell Monsanto's new arthritis drug, Celebra, the next potential blockbuster in the drug industry. Celebra treats pain and inflammation without irritating the stomach. Celebra was part of Monsanto's attraction for American Home, which has grown through acquisitions over the years. Shareholders don't expect that to stop. ''Something else is going to happen,'' said Jeff Bianchi, an analyst with Aeltus Investment Management. ''Once a company puts itself up for sale or is looking for mergers, it doesn't stop when there is a failed merger attempt.'' American Home earlier this year disclosed that it had had merger talks with U.K.-based drugmaker SmithKline Beecham Plc. Analysts attributed the end of these talks to a failure of top executives to decide who would lead the combined business. The recent agreement with Monsanto foundered for similar reasons, they said. ''We're disappointed that the management teams couldn't make the deal work for whatever reason,'' said Karen Johnson-Grunst, an analyst with Banc One Investment Advisors. American Home's agricultural business would have benefited from Monsanto's management, Johnson-Grunst said. Now, American Home might consider selling its American Cyanamid unit, which makes herbicides and insecticides, she said. ''If they don't have Monsanto's expert management to run it, they may sell it,'' she said. American Home earlier this year shed a medical-supply business to better concentrate on pharmaceuticals and agriculture. It sold the unit to Tyco International Ltd. for $1.77 billion in March. -- Marion Gammill and Kerry Dooley in the Princeton newsroom