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

To: Dan Spillane who wrote (631)	11/30/1998 8:08:00 PM
From: Anthony Wong	Respond to of 2539

FOCUS-Monsanto may sell sweeteners, other assets Monday November 30, 7:11 pm Eastern Time CHICAGO, Nov 30 (Reuters) - Life sciences firm Monsanto Co. may sell its NutraSweet artificial sweetener business and other parts of its nutrition and consumer products operations to help pay for $6 billion in planned acquisitions, analysts said on Monday. ''Monsanto has bitten off perhaps more than they can chew and pay for and there is a need to raise capital,'' said John McMillin, Prudential Securities food and agribusiness analyst. St. Louis-based Monsanto, which earlier this year announced plans to acquire four seed companies for about $6 billion, said earlier in November it would restructure and sell off some businesses as it prepares to complete the deals. Monsanto said the asset sales would generate gross proceeds of at least $1 billion. The U.S. Justice Department said on Monday it approved Monsanto Co's (NYSE:MTC - news) $2.3 billion acquisition of DeKalb Genetics Corp (NYSE:DKB - news) after Monsanto made certain changes in the deal to resolve competitive concerns. ''The real issue is what do they plan to do with their nutrition and consumer business, specifically sweeteners and the Kelco business?'' said Donald Carson, an analyst at J.P. Morgan. ''They have talked about perhaps raising their asset sales target to a higher number, like $3 billion, and if that were the case, those would be the businesses to go.'' Monsanto bought food ingredient maker Kelco from Merck and Co. Inc. (NYSE:MRK - news) in 1995 for about $1.1 billion. A Monsanto spokeswoman said the company would have a list of possible assets for sale by mid-January but declined to comment on which might be on the block. Several analysts also declined to speculate, saying it would be nothing more than a guessing game at this point. Other analysts said Monsanto's broken $34 billion merger agreement with pharmaceutical firm American Home Products Corp. (NYSE:AHP - news) forced the company to find alternative ways to finance the seed company acquisitions. Cash-rich American Home could have absorbed much of the acquisition costs, the analysts said, but the deal fell apart in October, leaving Monsanto with a full shopping cart and limited cash. Selling the nutrition assets would generate much-needed money and rid Monsanto of a business whose profit growth has slowed in recent years, analysts said. The nutrition and consumer products segment generated net sales of $1.5 billion in 1997, down slightly from 1996. Operating income was $211 million, up from $193 million a year earlier. ''You could see either the entire nutrition/consumer business sold or possibly parts of it,'' said James Kelleher, an analyst with Argus Research. ''The most likely part to sell would be Kelco,'' he said. ''The second most likely would be the mature NutraSweet business, which is a great cash generator, although returns continue to shrink. The third would be neotame, which is value-added and will be patent-protected for some time to come.'' Monsanto plans to seek wider U.S. Food and Drug Administration approval for neotame, the artificial sweetener Monsanto said is about 8,000 times as sweet as sugar. NutraSweet is about 180 times as sweet as sugar. Any deal to sell NutraSweet would likely include neotame, J.P. Morgan's Carson said. ''It doesn't strike me that selling aspartame only would be very marketable. I don't think you would get much money for an off-patent sweetener business that is already seeing significant competition from new sweeteners,'' Carson said. Shares of Monsanto were up 3/8 at 45. biz.yahoo.com