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21 December 1999 Merger deal is ‘bad for Monsanto’ _BY DONALD MACPHAIL_ THE merger of life sciences company Monsanto with Pharmacia & Upjohn has been heralded as a bad deal for

shareholders and a victory for environmentalists. Britains broadsheet newspapers report that shares of both companies fell sharply after yesterdays announcement of the £16.5 billion stock

transaction. Twenty per cent of Monsantos controversial agricultural unit, which has borne the brunt of protests against genetically modified crops, will be spun off in the deal. _The Times_

describes Monsanto as “the most ardent advocate of GM foods”, saying that environmental campaigners have claimed another victim. It predicts that the deal could lead to the “effective

break-up and disappearance of Monsanto” and calls the deal a “crushing verdict on agrochemicals”. Citing the Monsanto merger and similar moves by other companies, the paper concludes: “Life

sciences is a concept which is dying with the millennium.” The _Financial Times Lex_ column takes a similar stance, saying the no-premium merger “falls far short of the best deal each

company might have done”. It would have been better for Monsanto to be split in two, allowing the fast-growing pharmaceutical arm to be “gobbled up” by a rival for a fat premium. The

newspaper describes the deal as “vulnerable” although P&U believes many observers have too negative a view of Monsantos agrochemical division. And including the agriculture unit in the

deal may have enabled P&U to obtain the highly successful Searle pharmaceutical unit at a bargain price, he suggests. He says the new company will hope to “ride out environmental

protests” and improve the agribusiness for a possible sale when agricultural sector improves. _The Independent_ reports a “cool reception” to the merger and quotes an analyst who warns that

the spin-off plan could be difficult to sell to investors. _The Guardian_ covers the story under the headline “Monsanto pays GM price”, saying that the company bowed to consumer and

shareholder pressure. “Technology promoted by Monsanto as a revolutionary way of revitalising the struggling agricultural industry had become an albatross for the group.” Such is the deep

concern over GM foods that the fall in the both companies shares can be explained by the decision to keep a controlling stake in the division. Monsanto chief executive Robert Shapiro is

described as a “humbled man” who has seen his biotechnology vision and company share price “crumble”. Mr Shapiro is largely blamed for embarking on a £8bn shopping spree on biotechnology

companies, and for failing to anticipate GM opposition. He will cede control of the new company completely in 18 months.