Contacts: Pioneer
Tim Martin
(515) 334-6837
DuPont
Tom Barry
(302) 992-6285
DuPont and Pioneer Hi-Bred International Form Alliance
Chicago (August 7)...DuPont and Pioneer Hi-Bred
International today announced an agreement to form a research
alliance and separate joint venture company to speed the
discovery, development and delivery of new crops that benefit
farmers, livestock producers and consumers worldwide.
As part of this agreement, DuPont will invest $1.7 billion
in Pioneer, ultimately owning 20 percent of its stock for $104
per share and will have two of the 15 seats on Pioneer's board of
directors. Pioneer will use the proceeds to buy back its own
stock.
This agreement also includes a 16-year stand-still and
corporate governance agreement.
"This linkage with DuPont will enable Pioneer as an
independent company to team with a leading agricultural
technology provider to meet the changing needs of crop producers
and end users of grain and oilseeds," said Charles S. Johnson,
chairman, president and chief executive officer of Pioneer.
Farmers will benefit from this alliance by being able to
grow new, higher-value crops for specific uses; livestock
producers will use grain from the crops to improve efficiency and
product quality; consumers will benefit from healthier, more
nutritious food and food ingredients, as well as from the long-
term prospects of using more products made from renewable
resources.
"This alliance, with one of the world's leading plant
genetics companies, is an investment in the future of
biotechnology, and demonstrates our commitment to continue
building DuPont's life sciences businesses in a way that adds
value to shareholders, customers and society at large," said John
A. Krol, president and chief executive officer of DuPont.
"Life sciences used to be a matter of classical biology,
chemistry and genetics," said Mr. Krol, "but today the skills
needed to pursue both biotechnology and materials businesses like
chemicals and polymers are overlapping at a rapid rate. DuPont
and Pioneer will integrate DuPont's recognized strengths in
materials sciences and biotechnology with Pioneer's global
strength in corn and oilseed genetics to create a new generation
of products for agriculture.
"Pioneer and DuPont share a vision for a future that
includes adding value to grain and oilseeds for those
traditionally involved in food and feed production, and improving
the quality of countless products now based on commodity grains
or petrochemicals. The research capabilities that will be
brought to bear on agricultural products through this alliance
will be unparalleled in our industry," said Mr. Johnson. "A
revolution is underway in improving crop genetics, which has the
potential to benefit everyone. This venture will be a catalyst
for that revolution and will create a premier plant sciences
program."
"The world agriculture market is changing at a terrific
pace," said Mr. Johnson. "It is clear Pioneer and DuPont have
the people, technology and access to world crop production
systems to anticipate and meet the demands of this dynamic market
place."
The alliance will create one of the worlds largest private
agricultural research and development collaborations. The two
companies will collectively invest more than $400 million in
agricultural research next year. A portion of those budgets will
support the joint venture directly, with collaborative research
in genetic modification of corn, soybeans and other oilseeds to
improve their oil, protein and carbohydrate composition. Both
companies can also apply discoveries and technology gained from
the alliance to enhance traditional products such as hybrid seed
or crop protection chemicals.
The equally owned joint venture company, Optimum Quality
Grains will bring the improved products to customers. The joint
venture includes DuPont Agricultural Products' Quality Grains
business and Pioneer's Nutrition Industry Markets business. Both
are based in Des Moines, Iowa.
William F. Kirk, vice president and general manager of
DuPont Agricultural Products said the two companies already have
complementary technologies that resulted in improved quality
products. Examples include DuPont's Optimum[R] high-oil corn and
high-oleic soybeans, and Pioneer's low linolenic soybeans, high-
oil corn and high-oil sunflowers. About one million acres of
Optimum[R] high-oil corn will be produced in the United States this
year. This corn contains nearly twice as much oil as traditional
corn, which helps livestock producers improve the quality and
efficiency of their feed.
In connection with the transaction, DuPont anticipates it
will take a one-time, non-cash charge to earnings. The charge
involves an accounting write-off assigned to in-process research
and development, and is not expected to exceed $1 billion. Going
forward, DuPont would expect 1998 earnings dilution of less than
two percent. DuPont intends to fund the transaction with cash
flow from operations and borrowings, as appropriate.
In addition to its biotechnology-based business, DuPont
Agricultural Products is a leading world supplier of crop
protection products, which are not part of the alliance. Based
in Wilmington, Del., DuPont Agricultural Products is a business
unit of DuPont (NYSE:DD), a global chemical, energy and life
sciences company.
Pioneer Hi-Bred International, Inc. (NYSE:PHB) is the
world's leading supplier of agricultural genetics and is a
leading integrator of agricultural technology. Headquartered in
Des Moines, Iowa, Pioneer develops, produces and markets a full
line of seeds, microbial products and services to farmers, grain
processors and other customers worldwide. B.T. Wolfensohn Group
acted as financial advisor to DuPont and Lazard Freres & Co. LLD
acted as financial advisor to Pioneer.
# # # #
Pioneer announced with respect to the equity investment by
DuPont announced earlier today, that Pioneer intends as required
under the agreement to commence a Dutch auction self tender offer
promptly following completion of the DuPont investment. The
DuPont Investment is scheduled to close after satisfaction of
closing conditions including the expiration of the Hart-Scott
waiting period.