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

To: Dan Spillane who wrote (1626)	3/15/1999 10:50:00 PM
From: Anthony Wong	Read Replies (3) \| Respond to of 2539

Previous Story DuPont to buy seed firm Pioneer in $7.7 bln deal Next Story Experimental GM crops grown in Portugal Return to Headlines 03/15 15:01 DuPont deal leaves rival biotech firms in the cold By Emily Kaiser CHICAGO, March 15 (Reuters) - DuPont Co.'s <DD.N> plan to buy Pioneer Hi-Bred International Inc. <PHB.N> threatens to lock other firms out of the lucrative U.S. agricultural biotechnology field, and may generate rival bids from some biotech companies, analysts said on Monday. "I think a lot of biotech companies including Novartis AG <NOVZn.S>, Dow Chemical Co. <DOW.N>, AgrEvo and Rhone-Poulenc SA <RHON.PA> don't have access to the (seed) market," said Christine McCracken, agricultural biotech analyst with Vector Securities. "There is a possibility that one of those companies could make a competitive bid for Pioneer." A spokesman for Novartis said the company does not comment on rumors. Dow AgroSciences, AgrEvo and Rhone-Poulenc spokesmen could not be reached immediately for comment. McCracken said other biotech firms have the technology to make genetically modified seeds, but they lack the distribution channels. If DuPont buys Pioneer, a leading U.S. seed maker, those companies won't have access to Pioneer's distribution system, which controls 42 percent of the U.S. corn seed market. DuPont on Monday agreed to buy the remaining 80 percent of Des Moines, Iowa-based Pioneer it does not already own for $7.7 billion. The deal combines Pioneer's corn and soybean seeds with DuPont's pesticides and herbicides, and puts even more pressure on rival Monsanto Co. <MTC.N> to produce competitively priced, high-yielding agriculture products. "We are now down to two players, DuPont-Pioneer and Monsanto, and I see those two getting bigger," said Leonard Teitelbaum, food and agribusiness analyst with Merrill Lynch. Teitelbaum said he expected Monsanto and DuPont-Pioneer to control 75 percent of the U.S. corn and soybean seed market within the next five years, which would leave little room for other companies vying for a slice of the industry. The two currently hold about 54 percent of the U.S. corn market and 60 percent of the soybean market, he said. "There is nothing precluding Novartis or the others from bidding for Pioneer," he said. "They could put a bid in this afternoon, but they have to bid more than $40 (a share). I think right now they're going to have a problem. They can try to affiliate as a research partner with one of the two teams, thereby getting their genes into a distribution stream." Also, a bidder would have to buy DuPont's 20 percent stake, which would raise the price tag even higher. Teitelbaum said the DuPont deal would likely change the way farmers buy seeds and other agricultural products. "We're used to selling seed as a portion of the farmer's total package," he said. "In the future, I think we're going to see more bundling. You will buy your inputs from the Monsanto camp or the DuPont camp, and get seed, pesticides and herbicides as a package." Shares of Pioneer were up $3.875 at $38.19 on the New York Stock Exchange. DuPont's stock was down $1.375 at $56.375.