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Monsanto faces spinoff
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November 28, 2001: 1:44 p.m. ET
Parent Pharmacia also boosts stock buyback plan and adjusts guidance.
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NEW YORK (CNN/Money) - Pharmacia Wednesday increased its stock buyback program and said it would spin off its agricultural unit Monsanto to shareholders, who are smarting from this year's 24 percent decline in Pharmacia stock.
Pharmacia said it would spin off Monsanto through a tax-free dividend to stockholders in the second half of 2002 and also said it will increase its stock buyback program by $2 billion for a total repurchase program of $3 billion and up from a previously announced $1 billion.
The company, which makes the top-selling arthritis drug Celebrex, said its earnings for 2001 will be adjusted to reflect the Monsanto spinoff.
Excluding Monsanto, Pharmacia expects to earn $1.43 per share for 2001. Analysts were expecting the company to earn $1.74 per share including Monsanto.
But the company affirmed its earnings guidance for 2002.
"The spinoff we are announcing today will allow us to fully unlock the value of our pharmaceutical and agricultural businesses," said Pharmacia CEO Fred Hassan. "These are two distinct businesses serving different markets and customers. Separating these businesses positions both to realize their full potential and serves the best interests of our shareholders."
Pharmacia (PHA: down $1.70 to $44.81, Research, Estimates) completed its acquisition of Monsanto (MON: down $0.11 to $31.90, Research, Estimates) in March 2000, then floated about 15 percent of the company in an initial public offering in the 2000 fourth quarter.
Pharmacia outlines growth
Pharmacia said it is still on track to meet its previously announced earnings guidance for next year. Including Monsanto, as previously announced, the company sees yearly earnings of $1.91 to $1.96 per share, or $1.52 to $1.57 per share without Monsanto.
Sales in 2002, excluding sleep-aid Ambien, which will be transferred to Sanofi-Synthelabo next year, are expected to increase 7 percent to 10 percent. Sales of Celebrex are on track to exceed $3 billion.
The company, which announced the news in separate press releases, is meeting with analysts in New York. 
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