As reported in yesterday's news flash edition of Network News, DuPont and
Pioneer HiBred International have announced a definitive agreement for a
stock and cash merger that will result in DuPont's complete ownership of
Pioneer. DuPont currently has a 20 percent interest in Pioneer.
"This transaction is another major step in DuPont's life sciences strategy
and will strengthen and accelerate its capability to discover, develop and
commercialize a new generation of products across the value chains for food
and feed crops, food ingredients, industrial applications and nutrition
science," according to a news release issued yesterday.
Under the terms of the agreement, Pioneer shareholders will receive USD 40
per share, with 45 percent of the shares receiving cash and 55 percent of
the shares receiving DuPont stock. Pioneer shareholders will have certain
rights to elect which form of consideration they receive. The merger is
expected to close during the summer of 1999. The total equity value of the
transaction is estimated to be approximately USD 7.7 billion for the 80
percent of Pioneer not currently owned by DuPont.
"One of the Most Important Mergers in U.S. History"
"I believe this is one of the most important mergers in U.S. history,"
DuPont Chairman and CEO Chad Holliday said at a news conference in New York
City yesterday following the announcement of the merger agreement between
DuPont and Pioneer. "We are joining with an old friend, to fundamentally
improve the quantity and quality of food per acre." Chad went on to make
six points:
"We do have the critical mass to lead now" in life sciences.
"With Pioneer we are leaders in the input and output traits of farming"
(adding value for the farmer and for the ultimate consumer).
"Pioneer is a leader in germ plasma."
"Pioneer has a first-rate management, under Chuck Johnson."
"Our interests are closely aligned."
"Pioneer will operate under its own name, in its own home of Des Moines,
Iowa, and with its own culture."
Chuck Johnson, chairman and CEO of Pioneer, said: "This will be the most
powerful agricultural technology force in the world. We know DuPont and we
have a common vision of increased production for farmers and the quality of
the products they grow. Plant genetics are the only way for farmers to
increase production without opening up new, fragile land." In answer to a
question, he said Pioneer had some 60 hybrids in the pipeline and "a whole
stream of opportunities to add traits" in the years ahead.
DuPont Chief Financial Officer Gary Pfeiffer said the deal was expected to
be closed by the end of the third quarter.
In a later interview on CNBC TV, Chad said: "By August this year there will
be six billion people in the world and it is our ambition to feed them the
most nutritional food possible." He reiterated that "DuPont is a science
company" incorporating different kinds of science, including materials
science.
Chad: "Let's Welcome the People of Pioneer"
In his latest letter to employees, DuPont Chairman and CEO Chad Holliday
talks about the acquisition of Pioneer, declaring: "It is a major step in
our sustainable growth strategy and our plans to increase shareholder value.
"This transaction will strengthen and accelerate our ability to discover,
develop and commercialize a new generation of products for food and feed
crops, food ingredients, industrial applications and nutrition science," he
continued. "It fully supports our goal of helping improve the world's food
supply by increasing the quantity and quality of nutrition per acre. It is
truly another 'leap' for DuPont Ö and will enhance an already outstanding
science and technology platform and marketing capability. It will Ö
accelerate the integration of DuPont's biology, chemistry and genomics with
Pioneer's leading market position and research and development
capabilities. The end result should be significantly increased shareholder
value.
"Both of our companies share a strong focus on customers and have
compatible cultures and values," he concluded. "Please join me in
welcoming the people of Pioneer fully into the DuPont family."
DuPont Pioneer Merger Provides Mutual Benefits
Commenting on the agreement for DuPont to acquire Pioneer, The Wall Street
Journal noted yesterday that there were mutual benefits.
"DuPont, whose scientists have probably had the most success at genetically
altering the nutritional attributes of crops, would get direct control of
the world's biggest proprietary seed bank as well as a global seed sales
force," the article suggested.
"Pioneer's agreement to be acquired represents a big cultural change for
the 73-year-old company, which was founded by one-time U.S. Vice President
Henry A. Wallace," The Wall Street Journal pointed out. However, it noted
benefits to Pioneer, including what DuPont brings to the table in terms of
genes and "deep pockets".
Subscribers to The Wall Street Journal Interactive Edition can read the
full report at http://interactive.wsj.com/articles/SB921268716949898331.htm
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Further info: http://www.dupont.com/corp/whats-new/newsfile/990316.html#one
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