| DuPont to
acquire Pioneer |
Willmington, Delaware and Des Moines,
Iowa
March 15, 1999
DuPont and Pioneer
HiBred International, Inc., today announced that they have signed a definitive
agreement for a stock and cash merger that will result in DuPont's complete ownership of
Pioneer. This transaction is another major step in DuPont's life sciences strategy and
will strengthen and accelerate its capability to discover, develop and commercialize a new
generation of products across the value chains for food and feed crops, food ingredients,
industrial applications and nutrition science. DuPont currently has a 20 percent equity
interest in Pioneer.
Under the terms of the agreement, Pioneer shareholders will receive USD 40 per share, with
45 percent of the shares receiving cash and 55 percent of the shares receiving DuPont
stock. Pioneer shareholders will have certain rights to elect which form of consideration
they receive. The merger is expected to close during the summer of 1999. The total equity
value of the transaction is estimated to be approximately USD 7.7 billion for the 80
percent of Pioneer not currently owned by DuPont.
The boards of directors of both companies have approved the transaction.
"This transaction will further enhance an already outstanding technology platform and
marketing capability, while giving us greater ability to speed new products to market and
deliver value across the agriculture and nutrition industries," said Charles O.
Holliday, Jr., DuPont chairman and chief executive officer. "Our excellent
relationship with Pioneer has grown even stronger during the last 18 months, enabling us
to create further synergies by totally integrating DuPont's biology, chemistry and
genomics with Pioneer's leading market position and research and development capabilities.
The end result should be significantly increased shareholder value."
Holliday added, "Both companies are customer focused with compatible cultures and
values. By bringing together DuPont's ag businesses and Pioneer's seed business, we are
creating an agricultural enterprise with USD 5 billion in annual sales, which will be
focused on growth."
"Crop genetics offers tremendous potential for meeting the needs of farmers,
agriculture and consumers around the world," said Charles S. Johnson, who will
continue to lead Pioneer as chairman, president and chief executive officer.
"Bringing the talents and resources of our two
companies more closely together will ensure we deliver that potential to the market and do
it quickly."
The transaction will increase DuPont's ability to create output trait offerings based on
its own products or on complementary licensed products. It also will increase the speed to
market of these products and will strengthen DuPont's custom offering to food companies.
Longer range, DuPont's and Pioneer's combined R&D capabilities in biotechnology will
create a stronger scientific platform on which to build biomaterials opportunities.
Pioneer is the world's largest seed company, the most recognized seed brand in the world,
and a leader in North America and other key markets. Its strength rests on the
quality of its proprietary germ plasm, as well as a highly respected brand franchise and
integrated product and distribution
systems. Pioneer introduced 37 new corn hybrids in 1998 and has introduced 60 new hybrids
this year, including high-oil, herbicide and insect-resistant products.
As a wholly owned subsidiary of DuPont, Pioneer will continue to do business under the
Pioneer name and will remain headquartered in Des Moines, Iowa. It has 5,000 employees
worldwide. In the year 2000, the first full year of combined operations, DuPont expects
dilution in cash
earnings per share of about 1 percent. Fully diluted earnings per share will be reduced by
about 7 percent.
Last week DuPont announced two strategic efforts to aggressively and rapidly build its
life sciences portfolio. First, the company said that it is actively seeking alliances
with other strong partners in the pharmaceuticals industry to bring DuPont Pharmaceuticals
to critical mass through strategic alliances. Additionally, the company said its board has
authorized actions toward the creation and issuance of a "tracking" stock for
its life sciences businesses to give DuPont the financial flexibility to more
advantageously participate in industry consolidation trends and expand the portfolio.
In September 1997, DuPont and Pioneer formed a research alliance and in January 1998, a
separate joint venture company -- Optimum Quality Grains, L.L.C. DuPont also invested USD
1.7 billion in Pioneer to acquire a 20 percent equity interest. DuPont's total investment,
including the value of today's transaction, will be approximately USD 9.4 billion. It
currently holds two of the 14 seats on Pioneer's board of directors.
Credit Suisse First Boston and Salomon Smith Barney acted as financial advisors to DuPont
and Lazard Frères & Co. LLC acted as financial advisor to Pioneer.
Skadden, Arps, Slate, Meagher, & Flom LLP acted as legal counsel for DuPont and Fried,
Frank, Harris, Shriver, and Jacobson acted as legal counsel for Pioneer.
Pioneer Hi-Bred International, Inc., (NYSE-PHB) is the world's leading supplier of
agricultural genetics and is the leading developer and integrator of agricultural
technology. Headquartered in Des Moines, Iowa, Pioneer develops, produces, and markets a
full line of seeds, forage and grain
additives and services to grain and livestock producers, grain processors and other
customers worldwide.
Founded in 1802, DuPont is a global science and technology-based company. DuPont serves
worldwide markets including food and nutrition; health care; agriculture; fashion and
apparel; home and construction; electronics; and transportation. The company operates in
more than 70
countries and has 92,000 employees.N1620 |
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