Monsanto Seeks To Raise $5B
Monsanto moved Wednesday to come up with $5 billion to fund recent seed company acquisitions in a sweeping plan to issue more stock, cut some 2,500 jobs and unload some businesses.
The giant maker of agricultural and pharmaceutical products (MTC) said the staff reductions, slated to start in the first quarter of 1999, will target 700 to 1,000 jobs, some at the executive level. Out of its total work force of 28,000, another 1,300 to 1,500 positions will be eliminated through divestments.
"The actions announced today continue a long-term process," CEO Robert B. Shapiro said in a statement. "The period from 1999 to 2001 will be one of execution in the marketplace and delivery to our shareholders."Ahead of the news, shares of St. Louis-based Monsanto closed down 1/2 to 38 11/16.
The plans will result in a fourth-quarter pre-tax one-time charge of $400 million to $600 million.
It's a plan with a fast timetable. Monsanto said it hopes to raise $4 billion through stock and bond sales in the next few weeks. Another $1 billion is seen in selling off non-core businesses.
The restructuring comes less than a month after the company called off a $33.6 billion merger with American Home Products Corp. and posted a $100 million third-quarter loss.
Analysts weren't surprised by news in light of the failed American Home talks, which would have created the pharmaceutical industry's largest power.
Monsanto, which said the moves should slash costs by 20 percent, expects its marketing and technology expenses to rise with the launch of new pharmaceutical and agricultural products, as well as costs associated with its seed businesses.
Recently, the company announced plans to pay $2.3 billion to acquire the remaining 60 percent it doesn't already own in DeKalb Genetics Corp., the No. 2 U.S. seed-corn company.
Monsanto will sell $1 billion of common stock, about $500 million of which would be adjustable conversion-rate equity securities.
In the bond market, it would also raise another $2.5 billion in senior unsecured notes. Those notes may nobe available for sale in the United States.
Written By Janet Haney