http://biz.yahoo.com/rf/011112/n12310898_2.html
Monday November 12, 3:23 pm Eastern Time

Pharmacia seen spinning off Monsanto

NEW YORK, Nov 12 (Reuters) - Pharmacia Corp. (NYSE:PHA - news) will likely
spin off Monsanto Co. (NYSE:MON - news) to shareholders next spring as the
drug company seeks to rid itself of its volatile agricultural business,
analysts said.

Pharmacia completed its acquisition of Monsanto in March last year. Its aim
was to gain access to Monsanto's drug unit, which developed the blockbuster
arthritis drug Celebrex. Under the transaction, however, Pharmacia also
acquired the agricultural business.

The requirement to hold on to Monsanto ends in March 2002, and analysts
believe Pharmacia will waste no time in getting rid of a business which
develops genetically enhanced crops and whose main product is Roundup
herbicide. Pharmacia has already sold off 15 percent of Monsanto.

``We expect that Pharmacia will sell or spin off the remaining 85 percent of
Monsanto that it owns,'' said Jami Rubin, an analyst at Morgan Stanley. ``A
significant portion of Pharmacia earnings uncertainty comes from the ag
business.''

Pharmacia, which declined to comment on its plans for Monsanto, has
nonetheless made no bones about its lack of interest in the agricultural
business. In the third quarter the company said Monsanto shaved 3 cents from
its earnings per share.

``Pharmacia makes clear that they are first and foremost a drug company,''
said Steve Scala, an analyst at SG Cowen Securities Inc.

Peapack, New Jersey-based Pharmacia will most likely spin off Monsanto to
shareholders, analysts said. That's because Pharmacia is unlikely to find a
buyer for Monsanto, which has a market value of $7.9 billion.

``Monsanto's too expensive,'' said William Young, an analyst at Credit
Suisse First Boston, though he added that ``you can never rule anything
out.''

Monsanto executives were not immediately available for comment. The
company's shares were down 53 cents, or 1.8 percent, at $29.43 in late
Monday trading on the New York Stock Exchange.

Pharmacia's shares are currently trading at about $40.00, of which about
$5.00 is accounted for by the agricultural business, analysts said. In the
event of a spinoff, Pharmacia shareholders would receive a dividend or
coupon for their Monsanto shares, to do with as they wish.

Analysts said it would be bad for Pharmacia if shareholders didn't sell
their Monsanto stock, as it is that part of the business that is hurting
Pharmacia.

``Investors buy Pharmacia because they want the visibility and earnings
stability of a pharmaceuticals company,'' said Rubin. The agricultural
business is far more volatile.