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Biotech / Medical : Monsanto Co. -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (546)	11/14/1998 8:26:00 PM
From: Anthony Wong	Respond to of 2539

Monsanto Stock Slides in Wake of New Financing Plan, Company Suffers "Growing Pains" Friday, November 13, 1998 Section: BUSINESS By Robert Steyer Of The Post-Dispatch Monsanto Co.'s stock drifted lower Thursday as Wall Street analysts tried to digest a financing plan that includes issuing stock and debt, selling businesses and shedding as many as 2,500 jobs. The stock fell 69 cents to close at $38 a share. "I think people realize that this is the growing pains for a company going it alone," said Tom Brakel, a Monsanto analyst for Mehta Partners, an investment research firm in New York. "I don't think what they did was unexpected. But it was faster than expected." Minutes after stock exchanges closed Wednesday, Monsanto announced a series of moves designed to compensate for its failed merger with American Home Products Corp. The companies canceled the merger four weeks ago. Monsanto viewed the marriage proposal as a way to continue its ambitious research in crop biotechnology and medicine. American Home's financial and marketing prowess would have helped Monsanto bring several promising products to market. As a stand-alone company, Monsanto faced a balance sheet with a steadily climbing debt ratio. By the end of September, debt equaled 50 percent of total capital. Add two pending acquisitions valued at about $4.4 billion, and the ratio would jump to 64 percent. Monsanto officials told analysts Thursday that its financing plans would reduce that ratio to 55 percent. Monsanto plans to issue $2.5 billion in debt, $1 billion in stock and $500 million in a hybrid security similar to a convertible bond. The company also expects to gain $1 billion by selling several businesses. Robert B. Shapiro, Monsanto's chairman and chief executive, and Gary Crittenden, the chief financial officer, discussed the company's plans during a telephone conference call. They reiterated that Monsanto hopes to complete the financial transactions this month; the divestitures should be made within 60 days. The details of the debt deal will depend on decisions by bond rating agencies. Monsanto, which has discussed its plans with these firms, expects the agencies to issue their opinions in a few days. If they lower their ratings, Monsanto will have to pay more to borrow money. No stock analyst changed his rating after the telephone conference, although two reiterated "buy" recommendations. "It was impressive how swiftly Monsanto moved to make the financing decisions," said Tore Stole, who follows Monsanto for A.G. Edwards & Sons Inc. "They removed uncertainty about the financial picture of this company. Now we can focus on the products." Shapiro said 700 to 1,000 employees, most of them in administration, would lose their jobs. Between 1,300 and 1,500 more work in businesses that Monsanto plans to sell. The layoffs will take place in several months; the company expects to divest businesses within 60 days. Monsanto has 28,500 employees, including 3,200 in the St. Louis area. Monsanto said Thursday that its lawn-and-garden business is part of the sale list, but it declined to comment on speculation about other business units. Monsanto said in June that it would sell the lawn-and-garden unit - the Solaris Group - to Scotts Co. of Marysville, Ohio, for $300 million. Solaris has 400 employees and annual sales of about $250 million. A Monsanto spokeswoman said the deal should close soon. Several analysts say the sweetener business could be sold because it is becoming more vulnerable to competition from new brands and from generic versions of NutraSweet. But there's a wild card in this scenario: Monsanto is developing a super sweetener to bolster or replace NutraSweet. Other analysts say likely candidates for sale include bovine somatotropin (BST), food ingredients and some seed varieties. They say the genetically engineered BST, which raises cows' milk production, doesn't fit with Monsanto's focus on plant biotechnology. They add that Monsanto might sell its cotton seed company, which is the country's second-largest, or some seed corn assets to ease antitrust concerns. Federal regulators are still reviewing Monsanto's bids for DeKal b Genetics Corp., the second-largest U.S. seed corn company, and for Delta & Pine Land Co., the largest domestic cotton seed company. archives.stlnet.com