Analysis: Monsanto sweets worth $1.67bn

02 July 1999 21:59  [Source: ICIS news]

HOUSTON (CNI)--Analysts expect Monsanto to collect about $1.67bn (Euro1.61bn) from any sale of its sweeteners, biogum and algins operations and called the planned sale a positive step toward "meaningful debt reduction," CNI learned Friday.

Monsanto announced plans Thursday to add sweeteners and biogums to algins as operations marked for divestiture.

In response, the New York City-based debt rating service Standard & Poor's (S&P) issued a report affirming its ratings on Monsanto.

Meanwhile, Salomon Smith Barney issued a report projecting the sale value of the three businesses at $1.67bn. The securities firm called the plan "consistent" with Monsanto's previously announced strategy to finance recent acquisitions with divestitures.

S&P noted: "Monsanto will have invested about $8bn in the past two years to acquire seed and biotechnology companies following the pending acquisition of Delta & Pine Land in a stock merger valued at about $1.3bn."

In addition, S&P said: "The investments and alliances position Monsanto as a technology leader and establish a strong global distribution network for its genetically engineered crops."

But S&P warned: "Still, profit contributions from these new initiatives are expected to be somewhat modest in the near term…Costs to develop an attractive research and development pipeline and commercialise new products will continue to impair earnings and margin growth over the intermediate term."

Monsanto stock remained essentially unchanged Friday, closing down just 25-cent at $41.88/share compared with a 52-week high of $63.94 and a low of $33.75.

By: Gary Taylor
+1 713 525 2653

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