01 February 1995 00:00 [Source: ICB]
MONSANTO HAS purchased Kelco, the speciality division of Merck & Co, to boost its presence in the food ingredients and agricultural biotechnology markets. The $1.1bn acquisition, which will be funded by cash and debt, is still subject to US government approval.
Fears that Monsanto paid too much for the speciality chemicals firm, however, have been expressed by financial experts. 'The quality of the business is unquestionably excellent,' said SW Warburg analyst Paul Raman, but he added that 'the company may have overpaid for the acquisition.'
Monsanto has rejected such claims, insisting the price was fair considering 'the long-term potential of Kelco'.
'Kelco will offer significant growth opportunities for Monsanto worldwide. We can build on its strengths, add greater productivity through synergies and create value through growth,' said Monsanto president Robert Shapiro.
Kelco sales were expected to reach $300m in 1994. The company employs 1300 people in sites in the US and the UK. The sale is the last in a series of planned disposals of non-core businesses announced by Merck in August.
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