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Pharmacia to Sell Less of Monsanto

(31 August - Cropchoice News) -- Faster than you can say Roundup Ultra, Monsanto's new owners have finalized plans to start selling the St. Louis seed and chemical giant. Yesterday, New Jersey & Sweden-based Pharmacia (which bought Monsanto last year) filed paperwork to sell 15% of of the St. Louis seed and chemical company. Investors will be offered 35 million shares priced at between $20 and $25 each. The sale is expected to net $788 million for the new Monsanto, a disappointing return for Pharmacia.

The new Monsanto will be a different company than the old one. The Swedes have raided the crown jewels - the Searle pharmaceutical business - and made it part of Pharmacia. After taking Searle, Pharmacia is reducing its exposure to Monsanto's heavy debt and the risky agbiotech sector by spinning off the agriculture division.

Money made by selling stock in the new "pure-play" Monsanto will pay back loans taken out to buy seed companies and reduce exposure to unstable GMO markets. Wall Street is divided; but several analysts have suggested that Pharmacia will eventually sell most, or all, of its stake in "Monsanto II".

A little less of Monsanto is being sold than expected, probably because of poor expected value for the shares. At the current estimate, all of the new Monsanto is worth just over $5.25 billion. Last year, Pharmacia laid out $27.3 billion, mainly in stock, to acquire the company (including Searle and other smaller assets). CBS Marketwatch quoted a stock analyst concluding that Pharmacia "didn't want to sell all of it at these valuations." Monsanto is instead likely to be re-sold bit by bit.

SOURCE: SEC, Reuters, CBS, Recombinant Capital
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