Monsanto says it will spin off chemical business, cut 2,500 jobs

December 10, 1996|By BLOOMBERG BUSINESS NEWS

ST. LOUIS -- Monsanto Co. said yesterday that it will spin off its chemicals business to shareholders and fire up to 2,500 people so it can concentrate on its agricultural, food ingredients and pharmaceuticals businesses.

The move is the most dramatic of a series of steps by Monsanto to transform itself from a traditional chemical company into a leader in the emerging agricultural biotechnology industry.

Monsanto will set aside $400 million to $600 million to cover the cost of the spinoff, to be charged against 1996 earnings.

The company will retain crop protection products, NutraSweet artificial sweetener and pharmaceuticals businesses that generate $5 billion in sales.

"It's a very constructive move," said Van Harissis, who manages $2.5 billion -- including about 3.4 million Monsanto shares -- for Phoenix Duff & Phelps in Hartford, Conn. "They are committed to being at the forefront of the way agriculture is done and that is attractive to us."

Still, the company's shares fell 75 cents to $40.50 yesterday, reflecting disappointment that the chemicals unit was being spun off and not sold to an outside bidder for a premium, analysts said.

"There was some hope that an external bidder might come along and add additional value," said Jeff Spetalnick, an analyst at Oppenheimer & Co. Monsanto announced plans to sell or spin off the chemicals business in October.

Monsanto will slash up to 9 percent of its work force as it makes the spinoff. Those employees retained will be placed in one of the two companies by the end of the first quarter of 1997, the company said.

About 60 percent of the charges for the move will go toward severance and other personnel costs, analysts said. In ditching its chemical businesses, which had sales of $2.7 billion in 1995, Monsanto has placed its chips on a plant technology industry that is expected to generate sales of $6 billion by the year 2005.

Pub Date: 12/10/96

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.