PEAPACK, N.J. -- Pharmacia Corp. said that it will spin off its 85% stake in Monsanto Co., less than two years after the drug maker and agricultural company agreed to merge.
"The spinoff we are announcing today will allow us to fully unlock the value of our pharmaceutical and agricultural businesses," Pharmacia Chairman and Chief Executive Fred Hassan said in a prepared statement Wednesday.
"These are two distinct businesses serving different markets and customers. Separating these businesses positions both to realize their full potential and serves the best interests of our shareholders," Mr. Hassan said.
In March 2000 the former Pharmacia & Upjohn Inc. merged with Monsanto, giving the newly named Pharmacia Corp. control of Monsanto's Searle pharmaceutical business. In October of that same year Monsanto, St. Louis, sold 15% of its shares, representing its agricultural operations, in an initial public offering. Pharmacia currently owns 85% of Monsanto.
Pharmacia said Wednesday that it will distribute its entire ownership of Monsanto stock to Pharmacia shareholders by means of a tax-free dividend during the second half of 2002. Monsanto's financial results will be reported as discontinued operations.
When Pharmacia and Monsanto announced the merger in December 1999, investors were skeptical as to why Pharmacia shareholders would want to own part of an agricultural business. But taking that business public allayed some concern on Wall Street.
The merger was in part an attempt by Monsanto's Searle drug division to achieve critical mass that would assist its research and development. Searle has a rich pipeline that includes the blockbuster arthritis painkiller Celebrex, which was one of the most successful new drug launches in history. This year sales of Celebrex are pushing $3 billion -- compared with about $800 million for Pharmacia's next-best-selling drugs.
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