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Monsanta to Acquire Searle, Maker Of Nutrasweet

July 18, 1985

SKOKIE, Ill. (AP) _ Monsanto Co., the nation’s fourth-largest chemical company, is acquiring NutraSweet-maker G.D. Searle & Co. in a merger agreement worth about $2.7 billion, the two companies announced Thursday.

Monsanto agreed to buy all of Searle’s outstanding common stock for $65 a share, the companies said in a joint statement.

R. J. Mahoney, Monsanto’s president and chief executive officer, said his company was ″extremely pleased to be joining forces with such an established and respected company.″

The acquisition of Searle is ″a great strategic move″ for Monsanto, said New York stock analyst William Young of Dean Witter Reynolds Inc.

Wall Street seemed to agree with Young. Searle’s stock closed in composite New York Stock Exchange trading at $63.75 a share, up $4. Monsanto rose 50 cents to $50.25.

Young, who specializes in large chemical companies, said Monsanto’s takeover costs ″will be roughly offset by increased earnings due to the acquisition of Searle.″

Searle began studying the possibility of selling all or part of the company last year as a means of diversifying the Searle family holdings, but announced in March it had decided to remain independent.

Among the offers rejected was a bid from Monsanto for Searle’s pharmaceutical division.

Thursday’s announcement followed ″an unexpected and unsolicited contact from Monsanto expressing interest in pursuing a transaction,″ the joint statement said.

Searle spokesman William Greener said Searle previously had not received bids for the entire company.

″Searle’s NutraSweet and other products are attractive and profitable additions to Monsanto’s business,″ said Mahoney, whose company is one of the world’s leading producers of herbicide, a worldwide supplier of electronic- grade silicon and also makes AstroTurf.

Aspartame, better known by the brand name NutraSweet, has made strong contributions to Searle’s earnings since it was approved for use in soft drinks two years ago. Sales of NutraSweet products in 1984 were $585 million - nearly half the company’s $1.3 billion total income for the year and nearly double its 1983 sales of $336 million.

But Monsanto was most interested in Searle’s pharmaceutical division, which manufactures prescription drugs and such well-known over-the-counter items as Metamucil laxative and Dramamine, for motion sickness.

Monsanto spokesman Tom Slocum said Searle’s capabilities in researching and marketing pharmaceuticals will speed development of Monsanto’s own health-care products.

″Monsanto needs developmental marketing ... as well as research strength in pharmaceuticals to bring those products to the market as quickly as possible,″ Slocum said.

Analyst Young agreed, saying Monsanto ″needs the sales force and research force for their pharmaceuticals now under research.″

″NutraSweet has several more good years in it,″ he said, but he added, ″If a good buyer comes along, Monsanto might turn around and sell it.″

Young noted NutraSweet’s competition will get tougher when it ″goes off″ patent in 1992.

Donald Rumsfeld, Searle’s chairman and chief executive officer and former Mideast envoy for the Reagan administration, said of the agreement:

″Searle will now join forces with a financially strong, large enterprise with common strategic interests and a determination to see that the goals we have vigorously pursued for our company are achieved and exceeded.″

The joint statement said Searle’s board had ″unanimously concluded that this transaction is in the best interests of Searle’s shareholders, employees and customers and business partners, and will recommend that Searle’s shareholders tender their shares.″

Under the merger agreement, Monsanto will make a cash tender offer as quickly as possible for all outstanding shares. The offer is not contingent upon any minimum number of shares being tendered.

Any shares not purchased in the tender offer will be exchanged for $65 cash in a merger that will make Searle a wholly-owned subsidiary of Monsanto, the statement said.

The Searle family - descendants of Gideon Searle, who founded the company nearly a century ago - now controls about 20 percent of the company’s common stock, Greener said, a drop from about 34 percent in late March.

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