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DuPont To Buy Pioneer Hi-Bred Intl.

March 15, 1999

DES MOINES, Iowa (AP) _ Chemical giant DuPont Co. is purchasing Pioneer Hi-Bred International Inc., the world’s largest seed corn company, in a move analysts said reflects the rapidly consolidating agribusiness sector.

DuPont, which already owned 20 percent of Pioneer, will pay an estimated $7.7 billion for the remaining 80 percent, the company said Monday.

``The strength of the Pioneer-DuPont merger creates the most powerful agricultural biotechnology force in the world,″ said Jerry Chicoine, Pioneer’s executive vice president and chief operating officer.

Pioneer shareholders will receive $40 per share, with 45 percent of the shares being traded for cash and the remainder for DuPont stock. The boards of directors of both companies have approved the agreement, which is expected to be completed by the summer.

``Our interests are very closely aligned with Pioneer,″ said Charles O. Holliday Jr., DuPont chairman and chief executive officer. ``We think this is a natural extension of what we will have moving forward in the marketplace.″

As a wholly owned subsidiary of DuPont, Pioneer will retain its name and remain headquartered in Des Moines. It has 5,000 employees worldwide.

The Wilmington, Del.,-based DuPont had made no secret of its intention to expand in agriculture, bio-technology and pharmaceuticals. Two years ago, it spent $1.7 billion to buy 20 percent of Pioneer, with the companies creating a joint venture for crop research.

Analysts said the buyout cements DuPont as a leading player in agricultural bio-technology.

``I think this solidifies DuPont’s position as a tour-de-force in the ag-biotech sector,″ said Frank Mitsch, an analyst with Deutsche Bank Securities in New York. ``Pioneer is probably the premier seed company out there and by acquiring them, they will be able to more fully integrate their developments in terms of their output biotech traits.″

Chicoine said there had been no threat of a hostile takeover against Pioneer.

``What, in fact, occurred is the consolidation of our industry and that led us to the conclusion that we were at some risk,″ Chicoine said.

In the past several months, seed giant DeKalb Genetics Corp. and agribusiness leader Monsanto Co. merged in a deal worth $2.3 billion. Monsanto also acquired Scott, Miss.-based Delta & Pine Land Co., a leading producer of cotton seed, for $1.9 billion.

Charles S. Johnson, who will continue as Pioneer chairman, president and chief executive officer, said the acquisition will allow Pioneer to move its research rapidly and effectively to farmers.

``Plant genetics are the only way for the world’s farmers to increase their productivity without opening fragile lands (to farming),″ Johnson said.

However, not all groups embraced the DuPont-Pioneer alignment.

The Ames-based Iowa Farmers Union said mergers such as this could spell disaster for U.S. agriculture.

``Mergers and acquisitions in agriculture are occurring and being approved at breakneck speed with little regard for the consequences to America’s farmers,″ said John Whitaker, president of the farmers union. ``Merger mania is undermining our system of independently owned and operated farms, putting at risk not only farmers, but our nation’s food security.″

Shares of Pioneer rose $4.06 1/4, or 12 percent, to $38.37 1/2 in trading on the New York Stock Exchange. Shares of DuPont slipped $1.50, or 3 percent, to $56.25, also on the NYSE.

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