- Build world class pharmaceutical business; combined
pharmaceutical sales force to enhance market potential of key products led by Celebrex
- Creates top-tier strength in critical U.S. market
- Robust pipeline and more than $2 billion annual pharmaceutical
R&D budget to fuel future
growth
- Strong leadership and clear management structure to accelerate
growth potential and
synergies
- Leading global agricultural
business to be operated as a separate entity, with a partial IPO to strengthen
capabilities and help realize full value.
St. Louis, Missouri and Peapack, New Jersey
December 19, 1999
Monsanto Company and Pharmacia & Upjohn today announced that they have
entered into a definitive agreement to create a dynamic and powerful new competitor in the
global pharmaceutical industry. The new company will have one of the strongest sales
forces in the global pharmaceutical industry, an expansive product portfolio, a robust
pipeline of new drugs, including a number with blockbuster potential, and an annual
pharmaceutical R&D budget of more than $2 billion. The new company also will have one
of the world's leading fully integrated agricultural businesses. The combined company will
have estimated 1999 sales of $17 billion with a market capitalization of more than $50
billion.
The combined company, as yet to be named, will have a significantly strengthened position
in the
critical U.S. pharmaceutical market and complementary current and near-term products in
key
therapeutic areas. It will have a leading sales force in the critical U.S. pharmaceutical
market which will account for more than 50 percent of the company's global pharmaceutical
sales.
The agricultural business has a leading global position in
seeds, herbicides and biotechnology traits. In conjunction with the creation of the new
company, it is expected that up to 19.9 percent of the agricultural business will be
offered in an Initial Public Offering (IPO). The agricultural business will become a
separate legal entity, with a stand-alone board of directors and its own publicly-traded
stock upon completion of the intended IPO.
Leading the combined organization as President and Chief Executive Officer will be Fred
Hassan,
the current CEO of Pharmacia & Upjohn. Hassan will also have operational
responsibility for the
new company's core pharmaceutical business. Monsanto Chairman and CEO Robert B. Shapiro,
will become the non-executive Chairman for a period of 18 months, after which he will be
succeeded by Hassan.
The new company's corporate headquarters will be located in Peapack, NJ, along with the
pharmaceutical business. The new company's agriculture business will be headquartered in
St. Louis.
Under the terms of the merger-of-equals transaction, which has been unanimously approved
by both boards of directors, Pharmacia & Upjohn shareowners will receive 1.19 shares
of the combined enterprise for each share of Pharmacia & Upjohn they now hold. Each
Monsanto share outstanding prior to the combination will represent one share in the
combined company. The transaction will be tax-free to the shareowners of both companies
and is expected to be accounted for as a pooling of interests. Monsanto shareowners would
own approximately 51 percent of the combined company's shares.
Driven by top-line synergies, the new company is expected to achieve a higher earnings
level than
either company on its own. In addition, the new company plans to achieve annualized
synergies of more than $600 million consisting of cost avoidance and elimination of
duplication, some of which may be reinvested to accelerate growth opportunities.
Commenting on the transaction, Mr. Shapiro said: "The new company is being created
from two
rapidly growing organizations with strong global capabilities. It is a merger driven from
strength, and will have the appropriate scale and resources to capture the full value of
its growth potential. We'll also be achieving significant synergies as we combine two
technology-driven, market-leading businesses. The new company has a strong management
structure. Fred Hassan is a proven CEO and I'm confident he will bring the same dynamism
and focus on shareholder value to the new company that he brought to Pharmacia &
Upjohn.''
Said Mr. Hassan: "This is a combination designed to achieve both business growth and
enhanced
shareholder value over the near and long term. We are creating a high-growth
pharmaceutical
company with a global leadership in sales and marketing, a superior R&D platform, and
top-tier
growth prospects, including several products with blockbuster potential. At the same time,
we are
establishing a structure which gives our agricultural operations the scope and autonomy to
be a
leading independent entity in the agricultural field with high growth opportunity
supported by a strong capital structure and the potential for direct shareholder
investment.''
The new company's growing pharmaceutical business will be led by Celebrex, an innovative
new
treatment for arthritis launched in 1999 with sales to date of $1.4 billion; Xalatan, the
world's top
selling prescription medication for glaucoma; Detrol, the leading treatment for
over-active bladder;
Camptosar, a treatment for colorectal cancer; and Zyvox, a revolutionary new antibiotic
expected to be launched in 2000.
The new company has strong positions in a number of therapeutic areas, including arthritis
and
inflammation, antibiotics, oncology, cardiovascular, central nervous system,
ophthalmology, urology and women's health. The company also has a strong consumer
healthcare business led by key global brands, including the Nicorette family of
tobacco-dependency products and Rogaine/Regaine, a treatment for hair loss.
The combined company's board of directors will consist of 20 members, with representation
equally divided between Monsanto and Pharmacia & Upjohn.
Planned key appointments include that of Monsanto's Richard U. De Schutter, as Senior
Executive Vice President; Pharmacia & Upjohn's Christopher Coughlin, as Executive Vice
President and Chief Financial Officer; Monsanto's Philip Needleman, Ph.D. as Chief
Scientific Officer; and Monsanto's Hendrik A. Verfaillie as
CEO of the agricultural business. Further appointments will be announced
during the course of the merger integration process.
The transaction is expected to close in the second quarter of 2000, subject to approval by
both
companies' shareholders, normal governmental reviews and other customary conditions.
Company news release
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