Monsanto

Monsanto And Pharmacia & Upjohn To Merge, Creating Global Leader In Pharmaceuticals With Top-Tier Growth Prospects

The combined company, as yet to be named, will have a significantly strengthened position in the critical U.S. pharmaceutical market and complementary current and near-term products in key therapeutic areas. It will have a leading sales force in the critical U.S. pharmaceutical market, which will account for more than 50 percent of the companys global pharmaceutical sales.

The agricultural business has a leading global position in seeds, herbicides and biotechnology traits. In conjunction with the creation of the new company, it is expected that up to 19.9 percent of the agricultural business will be offered in an Initial Public Offering (IPO). The agricultural business will become a separate legal entity, with a stand-alone board of directors and its own publicly-traded stock upon completion of the intended IPO.

Leading the combined organization as President and Chief Executive Officer will be Fred Hassan, the current CEO of Pharmacia & Upjohn. Hassan will also have operational responsibilities for the new companys core pharmaceutical business. Monsanto Chairman and CEO Robert B. Shapiro, will become the non-executive Chairman for a period of 18 months, after which he will be succeeded by Hassan.

The new companys corporate headquarters will be located in Peapack, N.J., along with the pharmaceutical business. The new companys agriculture business will be headquartered in St. Louis.

Under the terms of the merger-of-equals transaction, which has been unanimously approved by both boards of directors, Pharmacia & Upjohn shareowners will receive 1.19 shares of the combined enterprise for each share of Pharmacia & Upjohn they now hold. Each Monsanto share outstanding prior to the combination will represent one share in the combined company. The transaction will be tax-free to the shareowners of both companies and is expected to be accounted for as a pooling of interests. Monsanto shareowners would own approximately 51 percent of the combined companys shares.

Driven by top-line synergies, the new company is expected to achieve a higher earnings level than either company on its own. In addition, the new company plans to achieve annualized synergies of more than $600 million consisting of cost avoidance and elimination of duplication, some of which may be reinvested to accelerate growth opportunities.

Commenting on the transaction, Mr. Shapiro said: "The new company is being created from two rapidly growing organizations with strong global capabilities. It is a merger driven from strength, and will have the appropriate scale and resources to capture the full value of its growth potential. Well also be achieving significant synergies as we combine two technology-driven, market-leading businesses. The new company has a strong management structure. Fred Hassan is a proven CEO, and Im confident he will bring the same dynamism and focus on shareholder value to the new company that he brought to Pharmacia & Upjohn."

Said Mr. Hassan: "This is a combination designed to achieve both business growth and enhanced shareholder value over the near and long term. We are creating a high-growth pharmaceutical company with a global leadership in sales and marketing, a superior R&D platform, and top-tier growth prospects, including several products with blockbuster potential. At the same time, we are establishing a structure which gives our agricultural operations the scope and autonomy to be a leading independent entity in the agricultural field with high growth opportunity supported by a strong capital structure and the potential for direct shareholder investment."

The new companys growing pharmaceutical business will be led by Celebrex, an innovative new treatment for arthritis launched in 1999 with sales to date of $1.4 billion; Xalatan, the worlds top selling prescription medication for glaucoma; Detrol, the leading treatment for over-active bladder; Camptosar, a treatment for colorectal cancer; and Zyvox, a revolutionary new antibiotic expected to be launched in 2000.

The new company has strong positions in a number of therapeutic areas, including arthritis and inflammation, antibiotics, oncology, cardiovascular, central nervous system, ophthalmology, urology and womens health. The company also has a strong consumer healthcare business led by key global brands, including the Nicorette family of tobacco-dependency products and Rogaine/Regaine, a treatment for hair loss.

The combined companys board of directors will consist of 20 members, with representation equally divided between Monsanto and Pharmacia & Upjohn.

Planned key appointments include that of Monsantos Richard U. De Schutter, as Senior Executive Vice President; Pharmacia & Upjohns Christopher Coughlin, as Executive Vice President and Chief Financial Officer; Monsantos Philip Needleman, Ph.D., as Chief Scientific Officer; and Monsantos Hendrik A. Verfaillie as CEO of the agricultural business. Further appointments will be announced during the course of the merger integration process.

The transaction is expected to close in the second quarter of 2000, subject to approval by both companies shareholders, normal governmental reviews and other customary conditions.

This news release contains certain forward-looking statements, including, among other things, statements regarding each companys results of operations and expected cost savings and earnings per share effects. These forward-looking statements are based on current expectations, but actual results may differ materially from anticipated future events or results. Certain factors which could cause each companys actual results to differ materially from expected and historical results are described in Monsantos and Pharmacia & Upjohns periodic reports filed with the Securities and Exchange Commission, including Monsantos and Pharmacia & Upjohns 1998 annual reports and Forms 10-K and Exhibits 99 thereto, respectively.

This announcement is not an offer to sell nor a solicitation to buy any securities. The offering with respect to the proposed merger will be made only by the proxy statement/prospectus that will be distributed to shareowners in connection with their consideration of the transaction.

Scarlett Lee Foster
Monsanto
(314) 694-2883

Paul Fitzhenry
Pharmacia & Upjohn, Inc.
(908) 901-8770