Two of the top science-based companies in the US yesterday announced a $34 billion merger deal to create a broad-based `life sciences' group encompassing pharmaceuticals, agricultural products and food ingredients.
American Home Products, the East Coast-based drugs and pharmaceutical group, will, in effect, take over Monsanto, whose interests range from pharmaceuticals and food ingredients to biotechnology. The combined stock market valuation of the two companies is $96 billion.
The yet-to-be-named company, in which AHP will hold a 65 per cent stake, will have annual sales of $23 billion, employ 75,000 people and put $3 billion a year into research and development. Pharmaceuticals will be the largest element, accounting for about half the group's sales and two-thirds of the annual R&D budget. It will be some time before the full implications for the companies worldwide operations, including their plants in Ireland, become clear.
Agricultural interests, mainly derived from Monsanto and ranging from genetic engineering to herbicides, will be the second element. Sales in this area will be about $6 billion a year.
In New York lunchtime trading, Monsanto's shares were down at $54 and American Home Products' shares were up at $49.
John Stafford, AHP's chief executive, and Robert Shapiro, his counterpart at Monsanto, said the merger had been triggered by the need to ensure strong finance, research and marketing resources in the rapidly-consolidating life sciences industry.
Both companies have been in the merger frame recently. AHP, with annual sales of about $14 billion, attempted to merge with SmithKline Beecham to create a more powerful pharmaceuticals business.
