PROJECT MONDAY
AUGUST 3, 1998
CONFIDENTIAL
AGENDA
1. OVERVIEW OF PUBLIC MARKET VALUATION AND DATA 1
2. OVERVIEW OF PROJECTIONS 5
3. PRELIMINARY VALUATION ANALYSIS -- AS OF APRIL 28, 1998 9
4. VALUATION UPDATE -- AS OF AUGUST 3, 1998 27
OVERVIEW OF PUBLIC MARKET
VALUATION AND DATA
-1-
MONDAY STOCK PRICE PERFORMANCE
MONDAY'S STOCK PRICE HAS EXPERIENCED SIGNIFICANT VOLATILITY ASSOCIATED
LESS WITH ITS OPERATING PERFORMANCE THAN WITH OWNERSHIP CHANGES AND
LITIGATION OUTCOMES. MONDAY'S STOCK WHICH WAS TRADING AROUND $18 TO $20
FOLLOWING A PERIOD OF POOR PERFORMANCE, HAS RECENTLY TRADED AS HIGH AS
$23.75 FOLLOWING DOW'S ANNOUNCEMENT.
DAILY DATA -- 7/1/97 THROUGH 7/31/98
[graph plot points to follow]
Monday: Price (left axis)
Monday: Volume (right axis)
(a) 1/6/98 Monday announces joint-venture with J.G. Boswell that
will be called Phylogen Seed Company.
(b) 1/16/98 Dow Chemical raises Monday stake to 62.9%.
(c) 2/3/98 Monday loses $70.2mm patent suit against Monsanto.
(d) 3/17/98 Pioneer Hi-Bred sells its remaining 2mm shares of Monday
to Dow AgroSciences for $20.06 per share.
(e) 3/20/98 Monday is awarded $174.9mm in damages in a breach of
contract suit against the Monsanto Company.
(f) 4/20/98 Monday acquires Dinamilho Carol Productos Agricolas, a
Brazilian seed corn producer.
(g) 5/1/98 Dow Chemical makes announcement.
(h) 6/30/98 Monday wins lawsuit against Monsanto. Monsanto
immediately appeals the decision.
-2-
STOCK PERFORMANCE
MONDAY HAS UNDERPERFORMED BOTH ITS PEERS AND THE S&P 400.
DAILY DATA -- 7/1/97 THROUGH 7/31/98
[graph plot points to follow]
Monday
Custom Index: (ABTX, DKB, DLP, ELM, MTC, PHB)
S&P Composite Average (400 Stocks)
-3-
MONDAY CORP. - WALL STREET COMMENTARY
PRICE PRICE TARGET
WALL STREET COMMENTARY RATING TARGET DATE 1998E EPS 1999E EPS
ING Baring Furman Selz (7/08/98)
"While we believe it is possible that Dow could raise its offer Hold NA NA ($0.95) ($0.04)
above $20.50/share, we do not believe Monday shares at $23 3/8
present an attractive investment opportunity. We retrieve our
HOLD rating."
- --------------------------------------------------------------------------------------------------------------------------------
Deutsche Morgan Grenfell. (4/15/98)
"By 2002 Monday could have a meaningful seed business with sales Bay $35 NA ($0.75) $0.10
of $500 million (more than double the level we are anticipating
for FY98). By then, Monday should also have a meaningful cotton
seed business, an area in which the company had no presence just
last year. We think that Dow Agri-Sciences shares our view on
Monday, and that is why it continues to buy more shares, now
owning 69% of Monday."
- --------------------------------------------------------------------------------------------------------------------------------
Salomon Smith Barney (3/20/98)
"We continue to rate Monday a hold because it has not yet been Hold $24 4/99 ($0.40) $0.01
able to secure high enough quality germ plasm and a sizeable
enough market share to suggest that price will be driven by
fundamentals and has not yet convinced us that its technology
position is increasing in value."
- --------------------------------------------------------------------------------------------------------------------------------
IBEST Estimates (as of 7/16/98) # of Estimates: 1998: 8, 1999:6 ($0.51) $0.06
- --------------------------------------------------------------------------------------------------------------------------------
First Call Estimates (as of 7/9/98) # of Estimates:
1998: 8, 1999:6 ($0.61) ($0.04)
- --------------------------------------------------------------------------------------------------------------------------------
Monday Estimates (a) ($0.39) $0.02
- --------------------------------------------------------------------------------------------------------------------------------
Base Case Estimates (a) ($0.46)(b) ($0.19)
- --------------------------------------------------------------------------------------------------------------------------------
(a) Calculated based on 37.9mm fully diluted shares.
(b) Includes projected loss from write down of $12.0mm in 1998.
-4-
OVERVIEW OF PROJECTIONS
- 5-
OVERVIEW OF PROJECTIONS
TWO SETS OF PROJECTIONS HAVE BEEN UTILIZED IN THIS ANALYSIS, THE MONDAY
AND THE BASE CASE PROJECTIONS:
* The Monday Projections:
----------------------
* Compiled by Monday management
* Per Monday presentation to Dow AgroSciences ("DAS") Operating
Committee (December 1997)
* Revised from Monday Board approved 1998 5-year plan (Sept. 1997)
* Detailed projections provided for both seed and intellectual
property segments
* Base Case:
---------
* Based on Monday Projections
* Reflects DAS Management's latest update to Monday projections
* Monday's projections adjusted to reflect DAS assumptions regarding:
* Monday's under performance for the year to date 1998
* Weak competitive position
* Lower corn market share gains
* Product mix by corn product line
* SARD expense levels
* Detailed projections provided for both seed and intellectual
property segments
-6-
PROJECTIONS COMPARISON
(Dollars in millions)
Budget Projections
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 CAGR
REVENUES
Monday Projection $220.5 $248.6 $278.0 $319.3 $372.5 $393.3 $447.6 $538.7 $601.9 $687.0 13.5%
GROWTH -- 12.8% 11.8% 14.9% 16.7% 5.6% 13.8% 20.3% 11.7% 14.1%
Base Case 213.8 245.1 273.9 312.5 361.6 390.0 427.1 464.2 493.4 550.3 11.1%
GROWTH -- 14.7% 11.7% 14.1% 15.7% 7.8% 9.5% 8.7% 6.3% 11.5%
Difference (6.7) (3.5) (4.1) (6.8) (10.9) (3.3) (20.5) (74.5) (108.5) (136.8)
AS A % OF MONDAY 3.0% 1.4% 1.5% 2.1% 2.9% 0.8% 4.6% 13.8% 18.0% 19.9%
GROSS PROFIT
Monday Projection $99.3 $115.7 $128.4 $141.8 $169.2 $190.4 $223.2 $279.5 $315.8 $373.1 15.8%
MARGIN 45.1% 46.5% 46.2% 44.4% 45.4% 48.4% 49.9% 51.9% 52.5% 54.3%
GROWTH -- 16.5% 11.0% 10.4% 19.3% 12.6% 17.2% 25.2% 13.0% 18.2%
Base Case 94.5 104.7 114.6 128.3 154.1 173.7 197.8 224.5 241.7 282.1 12.9%
MARGIN 44.2% 42.7% 41.8% 42.6% 42.6% 44.5% 46.3% 48.4% 49.0% 51.3%
GROWTH -- 10.9% 9.4% 12.0% 20.2% 12.7% 13.9% 13.5% 7.7% 16.7%
Difference (4.9) (11.0) (13.8) (13.5) (19.0) (16.7) (25.4) (55.1) (74.1) (91.0)
AS A % OF MONDAY 4.9% 9.5% 10.8% 9.5% 8.9% 8.8% 11.4% 19.7% 23.5% 24.4%
(CONTINUED ON NEXT PAGE)
-7-
PROJECTIONS COMPARISON (CONTINUED)
(Dollars in millions except per share)
Budget Projections
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
EBITDA
Monday Projection $10.0 $17.7 $20.4 $20.6 $25.2 $25.2 $40.4 $75.4 $96.6 $128.7
MARGIN 4.5% 7.1% 7.4% 6.4% 6.8% 6.4% 9.0% 14.0% 16.0% 18.7%
GROWTH -- 77.3% 14.8% 1.0% 22.7% (0.3%) 60.3% 86.8% 28.1% 33.2%
Base Case (1.9) 3.9 14.0 12.8 17.2 31.0 42.6 59.8 64.9 82.2
MARGIN (0.9%) 1.6% 5.1% 4.1% 4.8% 8.0% 10.0% 12.0% 13.2% 14.9%
GROWTH -- NM 260.1% (8.1%) 34.3% 80.0% 37.2% 31.1% 16.4% 26.6%
Difference (11.9) (13.9) (6.4) (7.8) (8.0) 5.8 2.2 (19.6) (31.6) (46.5)
AS A % OF MONDAY 119.3% 78.2% 31.5% 37.7% 31.8% 23.2% 5.5% 26.0% 32.8% 36.1%
EBIT
Monday Projection ($2.2) $3.8 $4.7 $3.9 $7.7 $9.3 $23.8 $58.3 $79.1 $112.1
MARGIN (1.0%) 1.5% 1.7% 1.2% 2.1% 2.4% 5.3% 10.8% 13.1% 16.3%
Base Case (14.1) (9.0) (0.0) (2.1) 1.5 16.9 27.7 40.3 49.1 67.2
MARGIN (6.6%) (3.7%) (0.0%) (0.7%) 0.4% 4.3% 6.5% 8.7% 9.9% 12.2%
Difference (11.9) (12.8) (4.7) (6.0) (6.3) 7.6 3.9 (18.0) (30.0) (44.8)
BASE CASE AS A % OF MONDAY 645.9% (235.5%) (0.4%) (53.0%) 19.0% 181.4% 116.4% 69.2% 62.1% 60.0%
NET INCOME
Monday Projection ($14.8) $0.6 ($0.4) ($2.4) ($1.4) ($1.1) $7.5 $29.2 $43.2 $65.1
MARGIN (6.7%) 0.2% (0.1%) (0.8%) (0.4%) (0.3%) 1.7% 5.4% 7.2% 9.5%
GROWTH -- 104.1% 168.5% (485.1%) 40.2% 19.9% 752.6% 290.3% 47.9% 50.6%
EPS ($0.39) $0.02 ($0.01) ($0.06) ($0.04) ($0.03) $0.20 $0.74 $1.09 $1.61
Base Case (17.6) (7.2) (2.8) (5.2) (4.1) 4.9 11.6 20.4 27.2 39.3
MARGIN (8.2%) (3.0%) (1.0%) (1.6%) (1.1%) 1.3% 2.7% 4.4% 5.5% 7.1%
GROWTH -- 58.9% 61.5% (84.9%) 21.1% 220.9% 136.4% 75.9% 33.0% 44.7%
EPS ($0.46) ($0.19) ($0.07) ($0.14) ($0.11) $0.13 $0.31 $0.51 $0.68 $0.97
Difference (2.8) (7.8) (2.4) (2.8) (2.6) 6.1 4.1 (8.8) (16.1) (25.8)
BASE CASE AS A % OF MONDAY 119.3% NM 681.0% 215.2% 283.7% (428.0%) 155.0% 69.9% 62.8% 60.4%
-8-
PRELIMINARY VALUATION ANALYSIS
- - AS OF APRIL 28, 1998
-9-
OVERVIEW OF PRELIMINARY VALUATION ANALYSIS
(AS OF APRIL 28, 1998)
SEVERAL FACTORS AFFECTED MONDAY'S VALUATION PROCESS, INCLUDING THE
FOLLOWING ISSUES:
* Monday's historical and projected lack of profitability
* Monday's significant near-term negative cash flows
* Differing views on when and if Monday will become profitable
* Monday's public market value may be overstated due to research
analysts' projections which seem optimistic when compared to the
Monday and Base Case projections
* The Company's small size and weak market position relative to its
competitors must be considered; this leaves it at a significant
competitive disadvantage
* Limited comparable company universe and Monday's unique nature
reduces comparability
* Intellectual property and litigation components are difficult to
isolate for valuation purposes
-10-
SUMMARY OF PRELIMINARY VALUATION ANALYSIS
(AS OF APRIL 28, 1998)
[graphic]
(CONTINUED ON NEXT PAGE)
-11-
SUMMARY OF PRELIMINARY VALUATION ANALYSIS
(AS OF APRIL 28, 1998) (CONTINUED)
COMPARABLE PUBLIC COMPANY ANALYSIS VALUE RANGE
---------------
Revenue Multiple ($6.34-$13.68 with 20-30% $ 7.60 - $17.79
minority interests acquisition premium)
Discounted 2002 EBITDA Multiple
Monday Projections ($4.99 - $10.09 with 20-30% 5.98 - 13.12
minority interests acquisition premium)
Base Case Projections ($2.71 - $6.06 with 20-30% 3.25 - 7.88
minority interests acquisition premium)
DISCOUNTED CASH FLOW ANALYSIS
Monday - 4 Year Projections 6.65 - 8.92
Monday - 9 Year Projections 8.62 - 15.51
Base Case - 4 Year Projections 5.21 - 6.95
Base Case - 9 Year Projections 5.07 - 9.59
PRECEDENT ACQUISITION TRANSACTIONS 15.23 - 19.89
-12-
COMPARABLE COMPANIES ANALYSIS (AS OF APRIL 28, 1998)
WE HAVE ANALYZED COMPARABLE COMPANIES IN ORDER TO DETERMINE MONDAY'S
PUBLIC MARKET VALUATION. HOWEVER, THE FOLLOWING FACTORS IMPACT THE
EFFECTIVENESS OF THE METHODOLOGY:
* Comparable universe is limited
* Few comparables with similar size and focus / nature
* Wide range of comparable valuation multiples
* Intellectual property component
* Valuation also driven by earnings growth rate
* Limited investment research on a number of companies in the sector
* Monday's lack of profitability and differing internal and external
growth and profitability projections
* Merger activity in sector may be imputed in stock prices
-13-
COMPARABLE COMPANIES ANALYSIS (AS OF APRIL 28, 1998)
IN ORDER TO VALUE MONDAY, WE CONSIDERED THE FOLLOWING ISSUES, AMONGST
OTHERS, WHEN ANALYZING THE COMPARABLE COMPANIES:
* Historical and projected lack of profitability
* Least profitable of the comparables
* Near-term earnings outlook not comparable
* Market and competitive positions less established than the
comparable universe
* Pioneer and DEKALB are market leaders in the corn seed market
* Seed quality, brand recognition
* Reduced economies of scale to offset development costs
* Intellectual property component
* More technology than seed plays, such as AgriBioTech
* Partially offset by limited access to quality germplasm
* Pioneer Hi-Bred's access to key Monday technology
* Earnings growth rate
* Monday's 5-year earnings growth rate is above the low growth
fruit and vegetable seed producers, but less than the market leaders'
-14-
COMPARABLE COMPANIES ANALYSIS (AS OF APRIL 28, 1998)
SALOMON SMITH BARNEY ESTIMATES A PUBLIC MARKET VALUATION RANGE OF 1.2X
to 2.5X REVENUE, BASED UPON AN ANALYSIS OF COMPARABLE COMPANIES. OTHER
TRADITIONAL VALUATION MEASURES SUCH AS MULTIPLES OF PROJECTED 1998/1999
EPS AND HISTORIC EBITDA MULTIPLES ARE NOT MEANINGFUL DUE TO NEGATIVE
FINANCIAL PERFORMANCE.
COMPARABLE COMPANY ANALYSIS
IMPLIED EQUITY VALUE 20% - 30% MINORITY
SELECTED RANGE PER SHARE (a) ACQ. PREMIUM
---------------- ---------------------- --------------------
MONDAY LOW HIGH LOW HIGH LOW HIGH
-----------------------------------------------------------------------------------------
LTM Revenues $214.0 1.2x 2.5x $6.34 $13.68 $7.60 $17.79
-----------------------------------------------------------------------------------------
(a) Fully Diluted Shares Outstanding = 37.9 million.
Net debt = $16.7 million
-15-
COMPARABLE COMPANIES VALUATION (AS OF APRIL 28, 1998)
MONDAY'S LACK OF PROFITABILITY SIGNIFICANTLY REDUCES THE RELEVANCE OF
VALUATIONS DRIVEN BY HISTORIC FINANCIAL RESULTS. BY PERFORMING AN
ANALYSIS* ON MONDAY'S 2002 FINANCIALS AND DISCOUNTING THIS VALUATION
BACK, WE ATTEMPT TO CAPTURE THE IMPACT OF FUTURE PROFITABILITY.
4-YEAR DISCOUNTED SHARE VALUE
FIRM 2002 VALUE VALUE PER SHARE 2002 (a)
------------------------ ------------------------
LOW HIGH LOW HIGH
------------------------ ------------------------
EBITDA MULTIPLE
------------------------
PROJECTION 20.0x - 30.0x
------------------------------------------------------
2002 EBITDA Monday Case (mm) $25.2 (6.8% margin) $505.0 - $757.4 $ 9.50 - $16.17
2002 EBITDA Base Case (mm) 17.2 (4.8% margin) 344.5 - 516.8 5.16 - 9.71
1998 - IMPLIED VALUE PER SHARE
WITHOUT MINORITY INTEREST PREMIUM
-------------------------------------
MONDAY CASE BASE CASE
---------------- ----------------
COST OF EQUITY LOW HIGH LOW HIGH
--------------------------------- ----------------
12.5% $5.93 - $10.09 $3.22 - $6.06
15.0% 5.43 - 9.24 2.95 - 5.55
17.5% 4.99 - 8.48 2.71 - 5.09
--------------------------------- ----------------
1998 - IMPLIED VALUE PER SHARE
WITH MINORITY INTEREST PREMIUM (b)
-------------------------------------
MONDAY CASE BASE CASE
---------------- ----------------
COST OF EQUITY LOW HIGH LOW HIGH
--------------------------------- ----------------
12.5% $7.12 - $13.12 $3.87 - $7.88
15.0% 6.52 - 12.02 3.54 - 7.22
17.5% 5.98 - 11.03 3.25 - 6.62
--------------------------------- ----------------
* Lower EBITDA caused by intellectual property losses and expenses
results in the company's EBITDA multiple being above that of seed
operations.
Note: Number of fully-diluted shares outstanding: 37.9mm
(a) Based on 2002 Net Debt of $145.0mm (Monday case) and $149.1 (Base
case)
(b) Implied share price including minority interest acquisition premium
of 20% at low end of range and 30% at high end of range.
-16-
ANALYSIS OF COMPARABLE PUBLIC AGRICULTURAL
BIOTECHNOLOGY COMPANIES (AS OF APRIL 28, 1998)
VALUATION MULTIPLES STOCK PRICE VS. MARKET PRICE (B)/ FIRM
----------------------------------
(DELIVER IN MILLIONS, EXCEPT STOCK PRICE) PRICE(S) LTM HIGH CAP. 1998 EPS 1999 EPS 2000 EPS(A) VALUE (C)
------------------------------------------------------------------------------------------------------------------------
(d) AgriBioTech Inc. (ABTX) $14.38 (26.5%) 93.76 56.3x 22.8x 14.8x 85.40
(e) DEKALB (DKB) 33.38 (54.4%) 1,155 42.2 29.3 23.4 1,265
Delta and Pine Land (DLP) 43.31 (19.8%) 1,648 65.6 42.1 32.1 1,774
(f) Empresas Ca. Modema (ELM) 20.06 (2.3%) 2,308 20.5 20.1 13.2 1,681
Monsando (MTC) 54.31 (6.7%) 32,346 46.0 38.5 28.9 36,905
Pioneer Hi-Bred (PHB) 35.81 (7.2%) 8,747 31.5 25.5 21.3 8,266
(g) Vilmorin (RIN) 100.15 9.4% 296 20.9 17.6 15.0 385
------------------------------------------------------------------------------------------------------------------------
Median 42.3x 25.5x 21.3x
Mean 40.4 28.8 21.2
------------------------------------------------------------------------------------------------------------------------
(h) Monday $20.06 (21.6%) $722 NM NM NM $769
FIRM VALUE/LTM PROJECTED EPS GROWTH (B) 1999 PYE 2000 P/H
- ------------------------ ----------------------------------------------------
REVENUES EBITDA EBIT 2-YEAR 5-YEAR 5-YEAR CO. 5-YEAR CO.
- ------------------------------------------------------------------------------
1.2x 34.1x 38.7x NM 30.0% 6.3x 0.5x
2.7 20.0 26.0 44.3% 25.0% 1.2 0.9x
9.2 46.3 54.9 56.1% 30.0% 1.4 1.1x
1.8 20.7 39.6 2.0% 15.2% 1.3 0.9x
4.9 22.1 31.2 20.5% 20.0% 1.9 1.4x
4.6 18.4 23.1 NM 20.0% 1.3 1.1x
1.1 8.9 11.6 18.6% 10.0% 1.8 1.5x
- ------------------------------------------------------------------------------
2.7x 28.7x 31.3x 1.3x 1.3x
3.6 26.9 32.1 2.0 1.1
- ------------------------------------------------------------------------------
3.6x NM NM NM 22.5% NM NM
Note: EBITDA, EBIT, Net Income to Common, and EPS adjusted for unusual and
non-recurring items.
LTM: Latest Twelve Months as of 12/31/97.
NM: Not Meaningful
(a) Stock price as of April 24, 1998
(b) 2-Year EPS; IBES Estimated.
5-Year growth: Salomon Smith Barney Estimates for ABTX, DKB, DLP, MTC,
and PHB (Wilbur). Long term growth for ELM, Monday, and RJN from IBES.
(c) Firms Value equals equity value (all fully diluted shares at the stock
price less any option proceeds) plus straight debt, minority interest,
straight preferred stock, all out-of-the-money convertibles, less
investments in unconsolidated affiliates and cash.
(d) Pro formas for announced acquisitions.
(e) Stock price as of January 17, 1998, 30 days prior to sale announcement.
(f) Sold major components of business. Pro formas financials (1997A) taken
from Merrill Lynch report (Andrews).
(g) Estimated for U.S. CAAP.
(h) Company estimates for EPS calculations.
(i) IBES Estimates, as if not available, calculated by growing 1999 EPS by
estimated 5 year growth.
-17-
ANALYSIS OF COMPARABLE PUBLIC AGRICULTURAL
BIOTECHNOLOGY COMPANIES (AS OF APRIL 28, 1998)
LTM MARGINS LTM RETURN ON AVERAGE ASSETS RETURN ON
------------------------------------------------------ ------------------------------
OPERATING MARGINS GROSS PROFIT SG&A R&D EBITDA EBIT NET INCOME SALES EBITDA EBIT LTM EQUITY
------------------------------------------------------------------------------------------------------------------------------
(a) AgriBioTech Inc. (ABTX) 19.8% NA NA 3.5% 3.1% NA NM 7.2% 6.3% NM
DEKALB (DKB) 49.0% 25.2% 13.5% 13.5% 10.4% 6.9% 89.2% 12.1% 9.3% 15.8%
Deka and Pinc Land (DLP) 36.1% 11.5% 7.9% 19.9% 16.7% 10.0% 84.6% 16.8% 14.2% 25.6%
(b) Empresas La Moderna (ELM) NA NA NA 8.8% 4.6% (3.1%) 39.0% 3.4% 1.0% NM
(c) Moneamo (MTC) 58.9% 29.2% 13.9% 22.2% 15.7% 11.2% 68.3% 15.2% 10.7% 21.6%
Pioneer Hi-Bred (PHB) 56.8% 20.5% 8.6% 24.8% 19.8% 12.9% 78.6% 19.5% 15.5% 22.6%
(d) Vilmorin (RIN) 64.8% 30.4% NA 12.5% 9.6% 4.2% 85.3% 10.7% 8.2% 9.9%
------------------------------------------------------------------------------------------------------------------------------
Median 52.9% 28.5% 11.9% 13.5% 10.4% 8.5% 81.6% 12.1% 9.3% 21.4%
Mean 47.6% 24.9% 10.9% 15.0% 11.4% 7.0% 74.2% 12.1% 9.4% 19.1%
------------------------------------------------------------------------------------------------------------------------------
Monday 40.3% 31.3% 12.4% (6.8%) (12.2%) (13.3%) 77.0% NM NM NM
Note: EBITDA, EBIT, Net Income to Common, and EPS adjusted for unusual and
non-recurring items.
LTM: Last Twelve Months.
(a) Pro forma for announced acquisitions.
(b) Sold major components of business. Pro forma financials
(1997A) taken from Merrill Lynch report (Andrews).
(c) R&D reported as technological expense.
(d) Estimated for U.S. GAAP.
-18-
DISCOUNTED CASH FLOW ANALYSIS (AS OF APRIL 28, 1998)
THE QUALITY OF THE VALUATIONS DERIVED FROM DISCOUNTED CASH FLOW ANALYSES
ARE DEPENDENT ON THE QUALITY OF THE PROJECTIONS, THE DISCOUNT RATE, AND
TERMINAL VALUATION MULTIPLES UTILIZED.
Two sets of projections have been discounted: (i) the Monday
projecitons (ii) the Base Case projections
The seed and intellectual property operations have significantly
different risk profiles. As such, the results of these operations
should be discounted at different discount rates
An important factor in DCF is the terminal, or exit valuation
multiple. Seed and intellectual property valuations are primarily
driven by EBITDA and revenue multiples
Terminal value multiples have been adjusted to reverse variances
created from recent M&A transactions
-19-
DCF VALUATION SUMMARY (AS OF APRIL 28, 1998)
$ PER SHARE
4-YEAR PROJECTIONS 9-YEAR PROJECTIONS
LOW HIGH LOW HIGH
MONDAY CASE
Seed $6.07 - $8.17 $6.86 - $12.26
Intell. Property 0.00 - 0.17 1.18 - 2.67
NOL 0.58 - 0.58 0.58 - 0.58
_______________ ________________
Equity Value 6.65 8.92 8.62 15.51
BASE CASE
Seed $4.64 - $6.38 $3.68 - $6.96
Intell. Property 0.00 - 0.00 0.82 - 2.06
NOL 0.57 - 0.57 0.57 - 0.57
_______________ _______________
Equity Value 5.21 6.95 5.07 9.59
-20-
DISCOUNT CASH FLOW ANALYSIS - SEED OPERATIONS
(AS OF APRIL 28, 1998)
DISCOUNTED CASH FLOW ANALYSIS OF THE SEED OPERATIONS BASED ON MONDAY(a)
AND BASE CASE(b) PROJECTIONS GENERATED THE FOLLOWING VALUATION RANGES:
MONDAY PROJECTIONS BASE CASE PROJECTIONS
Terminal EBITDA Multiple Range Terminal EBITDA Multiple Range
12.0x 13.5x 15.0x 16.5x 18.0x 12.0x 13.5x 15.0x 16.5x 18.0x
WACC Equity Value per share as of 9/1/98 WACC Equity Value per share as of 9/1/98
4 Year 12.0% $5.54 $6.47 $7.40 $8.34 $9.27 12.0% $4.20 $4.97 $5.75 $6.52 $7.30
DCF 12.5% 5.42 6.33 7.25 8.17 9.08 12.5% 4.10 4.86 5.62 6.30 7.14
13.0% 5.30 6.20 7.10 8.00 8.90 13.0% 4.00 4.79 5.50 6.25 6.99
13.5% 5.18 6.07 6.95 7.83 8.72 13.5% 3.91 4.54 5.38 6.11 6.85
14.0% 5.07 5.94 6.81 7.68 8.54 14.0% 3.82 4.54 5.26 5.98 6.70
EBITDA Perpetuity Growth Rate EBITDA Perpetuity Growth Rate
3.00% 4.00% 5.00% 6.00% 7.00% 3.00% 4.00% 5.00% 6.00% 7.00%
WACC Implied Equity Value per share as of 9/1/98 WACC Implied Equity Value per share as of 9/1/98
9 Year 12.0% $8.40 $9.81 $11.64 $14.07 $17.48 12.0% $4.62 $5.48 $6.59 $8.06 $10.12
DCF 12.5% 7.47 8.69 10.24 12.26 15.02 12.5% 4.06 4.80 5.73 6.96 8.63
13.0% 6.66 7.72 9.04 10.74 13.00 13.0% 3.56 4.20 5.08 6.03 7.40
13.5% 5.94 6.86 8.00 9.44 11.32 13.5% 3.12 3.68 4.37 9.24 6.36
14.0% 5.32 6.10 7.09 8.32 9.90 14.0% 2.73 3.22 3.81 4.56 5.52
Note: Number of Fully-Diluted Shares: 37.9mm. Net Debt as of 9/1/98
(a) Per Monday presentation to DAS Operating Committee - 12/97.
(b) Monday 12/97 presentation adjusted by DAS working group.
-21-
DISCOUNT CASH FLOW ANALYSIS - INTELLECTUAL PROPERTY OPERATIONS
(AS OF APRIL 28, 1998)
DISCOUNTED CASH FLOWS ANALYSIS OF THE INTELLECTUAL PROPERTY OPERATIONS
BASED ON MONDAY(a) AND BASE-CASE PROJECTIONS(b) GENERATED THE FOLLOWING
VALUATION RANGES:
MONDAY PROJECTIONS BASE CASE PROJECTIONS
Terminal Revenue Multiple Range Terminal Revenue Multiple Range
6.0x 7.0x 8.0x 9.0x 10.0x 6.0x 7.0x 8.0x 9.0x 10.0x
WACC Equity Value per share as of 9/1/98 WACC Equity Value per share as of 9/1/98
4 YEAR 15.0% ($0.14) ($0.02) $0.11 $0.23 $0.35 15.0% ($0.29) ($0.18) ($0.07) $0.04 $0.15
DCF 17.5% (0.17) (0.05) 0.06 0.17 0.29 17.5% (0.31) (0.21) (0.10) (0.00) 0.10
20.0% (0.19) (0.09) 0.02 0.12 0.23 20.0% (0.32) (0.23) (0.13) (0.04) 0.05
22.5% (0.21) (0.11) (0.02) 0.08 0.18 22.5% (0.33) (0.24) (0.16) (0.08) 0.01
25.0% (0.23) (0.14) (0.05) 0.04 0.13 25.0% (0.34) (0.26) (0.18) (0.10) (0.03)
Terminal Revenue Multiple Range Terminal Revenue Multiple Range
6.0x 7.0x 8.0x 9.0x 10.0x 6.0x 7.0x 8.0x 9.0x 10.0x
WACC Equity Value per share as of 9/1/98 WACC Equity Value per share as of 9/1/98
9 Year 15.0% $2.15 $2.56 $2.96 $3.37 $3.78 15.0% $1.60 $1.95 $2.30 $2.65 $3.00
DCF 17.5% 1.66 2.00 2.33 2.67 3.01 17.5% 1.20 1.49 1.78 2.06 2.35
20.0% 1.27 1.55 1.82 2.10 2.38 20.0% 0.88 1.11 1.35 1.59 1.83
22.5% 0.95 1.18 1.41 1.65 1.88 22.5% 0.62 0.82 1.01 1.21 1.41
25.0% 0.70 0.89 1.08 1.28 1.47 25.0% 0.41 0.57 0.74 0.90 1.07
Note: Number of Fully-Diluted Shares: 37.9mm. Net Debt as of 9/1/98.
(a) Per Monday presentation to DAS Operating Committee - 12/97
(b) Monday 12/97 presentation adjusted by DAS working group.
-22-
PRECEDENT M&A TRANSACTIONS (AS OF APRIL 28, 1998)
THIS ANALYSIS UTILIZES THE VALUATION OF PRECEDENT TRANSACTIONS IN ORDER TO
DETERMINE MONDAY'S PRIVATE MARKET VALUATION. HOWEVER, MANY OF THE
TRANSACTIONS INVOLVE A CHANGE OF CONTROL, THEREFORE THE RELEVANCE TO THE
MONDAY SITUATION SHOULD BE QUESTIONED. THE FOLLOWING FACTORS IMPACT THE
EFFECTIVENESS OF THE EVALUATION:
- - Monday's lack of profitability
- - Few publicly disclosed transactions
- - Market position of target
- - Combination of seed and technology valuation
- - Control and non-control transactions
- - Wide range of valuation multiples
- - Differential between intellectual property and seed sector transaction
multiples
- - Recent transactions reflect increasing valuations for seed companies
(CONTINUED ON NEXT PAGE)
SALOMON SMITH BARNEY -23-
- --------------------
A MEMBER OF TRAVELERS GROUP
PRECEDENT M&A TRANSACTIONS (AS OF APRIL 28, 1998)
WHEN VALUING MONDAY, WE CONSIDER BOTH SEED AND INTELLECTUAL PROPERTY DRIVEN
AGRICULTURAL BIOTECHNOLOGY TRANSACTION MULTIPLES, ARRIVING AT DIFFERENT
RESULTS. MONDAY'S INTELLECTUAL PROPERTY PORTFOLIO REPRESENTS A MORE
SIGNIFICANT PORTION OF THE COMPANY'S VALUE THAN THE PERCENT OF TRAIT REVENUES.
PRECEDENT TRANSACTIONS ANALYSIS
Selected Range
--------------
Low High
---- -----
- -----------------------------------------------------
LTM Revenues
Seeds 2.0x 3.0x
Intellectual Property 6.0 10.0
- -----------------------------------------------------
By examining the intellectual property component of Monday, and based on
discussions with DAS management, we arrived at an intellectual property
revenue weighting of between 5% and 20%.
BLENDED MULTIPLE ANALYSIS
Weight Multiple % of Value
------------------ ------------------ Implied Equity -------------------
Monday Int. Prop. Seed Int. Prop. Seed Value Per Share (a) Int. Prop. Seed
- ------------------------------------------------------------------------------------------------------------------------
LTM Revenues $214.0 20% 80% 8.0x 2.5x $19.89 45.0% 55.0%
15% 85% 8.0 2.5 18.34 36.6% 63.4%
10% 90% 8.0 2.5 16.79 26.7% 73.3%
5% 95% 8.0 2.5 15.23 14.7% 85.3%
- ------------------------------------------------------------------------------------------------------------------------
(a) Fully Diluted Shares Outstanding = 37.9 million. Net debt = $16.7 million.
SALOMON SMITH BARNEY -24-
- --------------------
A MEMBER OF TRAVELERS GROUP
COMPARABLE M&A TRANSACTIONS (AS OF APRIL 28, 1998)
10 PRECEDENT TRANSACTIONS DRIVEN BY SEED VALUATIONS WERE IDENTIFIED:
($ IN MILLIONS, EXCEPT PER SHARE AMOUNT)
Transaction Details Acquisition Multiples
--------------------------------------------- ---------------------------
Implied Enterprise
Date Ann. Target Acquiror Value Consideration Sales EBITDA EBIT
- ---------- --------------------- ------------------ ------------------- ----------------------- ----- ------ ------
* 04/20/98 Dinamilho Carol Monday $28 N.A. 2.3x N.A. N.M.
Productos Agricolas
* 11/24/97 Agroceres (Brazil) Monsanto 230 N.A. 2.1x N.A. N.A.
09/16/97 Sunseed AgrEvo N.A. N.A. N.A. N.A. N.A.
08/07/97 Pioneer Hi-Bred DuPont 8,570 $1,710 for 20% 4.8x 19.0x 23.6x
12/12/96 Verneuil Holding Monday N.A. Purchased 18.75% of N.A. N.A. N.A.
Verneuil in exchange
for Monday's European
seed business
10/01/96 Morgan Seeds Monday 27 Cash 1.1x N.A. N.A.
09/24/96 Asgrow Monsanto 240 Cash N.A. N.A. N.A.
Agronomics (Seminis)
05/21/96 Sure Grow Group Delta & Pine Land 70 Stock N.A. N.A. N.A.
03/11/96 Dekalb Genetics Monsanto 462 $1.52 for 10% of voting 1.3x 11.9x 16.8x
stock, and 39% of non-
voting stock
02/21/95 Delta & Pine Land Monday Plant N.A. N.A. N.A. N.A. N.A.
Science
----------------------------------------------------
Mean 2.3x 15.5x 20.2x
Median 2.1x 15.5x 20.2x
----------------------------------------------------
Source: Securities Data Company, Bloomberg News Services, and SEC filings.
Note: For private firms with undisclosed financial statements, Implied
Equity Value is assumed to be Implied Enterprise Value.
* Dow AgroSciences estimates.
(CONTINUED ON NEXT PAGE)
SALOMON SMITH BARNEY -25-
- --------------------
A MEMBER OF TRAVELERS GROUP
COMPARABLE M&A TRANSACTIONS (AS OF APRIL 28, 1998) (CONTINUED)
12 PRECEDENT TRANSACTIONS DRIVEN BY INTELLECTUAL PROPERTY VALUATIONS WERE
IDENTIFIED:
($ IN MILLIONS, EXCEPT PER SHARE AMOUNT)
Transaction Details Acquisition Multiples
--------------------------------------------- ---------------------------
Implied Enterprise
Date Ann. Target Acquiror Value Consideration Sales EBITDA EBIT
- --------- --------------------- ------------------ ------------------- ----------------------- ----- ------ ------
04/06/98 Seed breeding program Phytogen Seed N.A. N.A. N.A. N.A. N.A.
(Monday & J.G.
Boswell)
01/06/98 Phytogen Cotton Monday N.A. $12 in cash, breeding N.A. N.A. N.A.
materials, licenses,
and patents
11/24/97 Mendel Biotechnology Monsanto/ELM $150 $30 in cash for 20% N.A. N.A. N.A.
05/13/97 Mogen Zeneca 75 N.A. 11.7x N.A. N.A.
04/01/97 Calgene Monsanto 594 $240 in cash for 3.0x N.M. N.M.
remaining 45%
01/06/97 Holden Monsanto 1,020 Purchase of Holden and N.A. N.A. N.A.
2 seed distributors
08/17/96 Plant Genetic Systems Hoechst Schering 739 Purchase 75% of PGS 96.2x N.A. N.A.
(PGS) AgrEvo
07/31/96 Calgene Monsanto 1,077 $50 in cash for 5.7% 10.3x N.M. N.M.
(and control)
04/08/96 Agraceius-Transgenic Monsanto 150 Cash N.A. N.A. N.A.
Plant Business
01/29/96 DNA Plant Technology Bionova (Empresas N.A. Contributes Bionova for N.A. N.A. N.A.
La Moderna) 70% in new entity
06/28/95 Calgene Monsanto N.A. Acq. of 49.9% stake for N.A. N.A. N.A.
$30 + contribution of
patents and equity
interest in Gargaulo
01/06/94 Monday Plant Science Monday N.A. $7 in cash + shares for N.A. N.A. N.A.
29.5% interest
----------------------------------------------------
Mean(1) 8.3x N.A. N.A.
Median(1) 10.3x N.A. N.A.
----------------------------------------------------
Source: Securities Data Company, Bloomberg News Services, and SEC filings.
Note: For private firms with undisclosed financial statements, Implied
Equity Value is assumed to be Implied Enterprise Value
(1) Does not include outlier (PGS)
SALOMON SMITH BARNEY -26-
- --------------------
A MEMBER OF TRAVELERS GROUP
VALUATION UPDATE
- - AS OF AUGUST 3, 1998
SALOMON SMITH BARNEY -27-
- --------------------
A MEMBER OF THE TRAVELERS GROUP
OVERVIEW OF UPDATED VALUATION ANALYSIS
(AS OF AUGUST 3, 1998)
THE RECENT MERGER ACTIVITY AND CONSOLIDATION OF THE SECTOR HAS PUT
UPWARD PRESSURE ON INDUSTRY VALUATION MULTIPLES.
- Comparable companies market prices reflect BOTH future financial
performance as well as anticipated acquisition premiums
- Recent precedent transactions are not readily comparable
- Targets achieved higher levels of profitability than Monday
- Targets had operational strengths beyond those of Monday
(market share, distribution, international presence, and
proven commercialization of technology)
SALOMON SMITH BARNEY -28-
- --------------------
A MEMBER OF THE TRAVELERS GROUP
UPDATED SUMMARY OF PRELIMINARY VALUATION ANALYSIS
(AS OF AUGUST 3, 1998)
VALUE PER SHARE (IN DOLLARS)
COMPARABLE PUBLIC COMPANIES ANALYSIS $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00
-----------------------------------------------------------------------------
Rev. Multiple with Minority Interests Acq. $9.64 $19.25
Premium
-----------------------------------------------------------------------------
----------------
Proposed Offer
Discounted 2002 - Monday with Minority $5.98 $13.12 Price
Interests Acq. Premium $20.50
----------------
-------------
Discounted 2003 - Base Case with Minority $3.25 $7.88
Interests Acq. Premium
-------------
-----------------------------------------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
-------
Monday 4 Yr. $6.65 $8.92
-------
------------
Monday 9 Yr. $8.62 $15.51
------------
-----------------------------------------------------------------------------
-----
Base Case 4 Yr. $5.21 $6.95
-----
--------------
Base Case 9 Yr. $5.07 $9.59
--------------
-----------------------------------------------------------------------------
---------------
Precedent Acquisition Transactions $18.76 $25.54
---------------
-----------------------------------------------------------------------------
(CONTINUED ON NEXT PAGE)
SALOMON SMITH BARNEY -29-
- --------------------
A MEMBER OF THE TRAVELERS GROUP
UPDATED SUMMARY OF PRELIMINARY VALUATION ANALYSIS
(AS OF AUGUST 3, 1998) (CONTINUED)
COMPARABLE PUBLIC COMPANY ANALYSIS VALUE RANGE
--------------
Revenue Multiple ($8.03 - $14.81 with 20-30% $9.64 - $19.25
minority interests acquisition premium)
Discounted 2002 EBITDA Multiple
Monday Projections ($4.99 - $10.09 with 20-30% 5.98 - 13.12
minority interests acquisition premium)
Base Case Projections ($2.71 - $6.06 with 20-30% 3.25 - 7.88
minority interests acquisition premium)
DISCOUNTED CASH FLOW ANALYSIS
Monday - 4 Year Projections 6.65 - 8.92
Monday - 9 Year Projections 8.62 - 15.51
Base Case - 4 Year Projections 5.21 - 6.95
Base Case - 9 Year Projections 5.07 - 9.59
PRECEDENT ACQUISITION TRANSACTIONS 18.76 - 25.54
SALOMON SMITH BARNEY -30-
- --------------------
A MEMBER OF THE TRAVELERS GROUP
UPDATED COMPARABLE COMPANIES ANALYSIS
(AS OF AUGUST 3, 1998)
SALOMON SMITH BARNEY ESTIMATES A PUBLIC MARKET VALUATION OF 1.5x TO
2.7x REVENUE, BASED UPON THE UPDATED ANALYSIS OF COMPARABLE
COMPANIES. OTHER TRADITIONAL VALUATION MEASURES SUCH AS MULTIPLES
OF PROJECTED 1998/1999 EPS AND HISTORIC EBITDA MULTIPLES ARE NOT
MEANINGFUL DUE TO NEGATIVE FINANCIAL PERFORMANCE.
COMPARABLE COMPANY ANALYSIS
SELECTED RANGE IMPLIED EQUITY VALUE PER SHARE (a) 20% - 30% MINORITY ACQ. PREMIUM
-------------- ---------------------------------- -------------------------------
MONDAY LOW HIGH LOW HIGH LOW HIGH
- -----------------------------------------------------------------------------------------------------------------
LTM Revenues $214.0 1.5x 2.7x $8.03 $14.81 $9.64 $19.25
- -----------------------------------------------------------------------------------------------------------------
(a) Fully diluted Shares Outstanding = 37.9 million. Net debt = $16.7 million.
SALOMON SMITH BARNEY -31-
- --------------------
A MEMBER OF THE TRAVELERS GROUP
ANALYSIS OF COMPARABLE PUBLIC AGRICULTURAL
BIOTECHNOLOGY COMPANIES (AS OF AUGUST 3, 1998)
VALUATION MULTIPLES PRICE (a)/
(DOLLARS IN MILLIONS, EXCEPT STOCK PRICE) FISCAL STOCK PRICE VS. MARKET ------------------ FIRM
YEAR ENDED PRICE (a) LTM HIGH CAP. 1998 EPS 1999 EPS VALUE (c)
- -----------------------------------------------------------------------------------------------------------------------
(d) AgriBioTech and (ABTX) 6/30 $18.00 (39.0%) $ 471 NM 58.4x $ 645
DEKALB (DKB) 8/31 92.19 (5.9%) 3,219 NM 78.1 3,482
Delta and Pine Land (DLP) 8/31 44.94 (16.8%) 1,897 NM 43.6 1,978
(e) Empresas La Moderna (ELM) 12/31 26.00 (0.5%) 2,991 86.7x 65.0 2,399
Monsanto (MTC) 12/31 56.43 (6.2%) 33,914 59.0 47.2 39,192
Monday 8/31 23.38 (8.3%) 847 NM NM 988
Pioneer Hi-Bred (PHB) 8/31 31.63 (25.9%) 7,640 30.1 24.1 7,442
- -----------------------------------------------------------------------------------------------------------------------
MEDIAN 55.0x 49.3x
MEAN 57.3 31.6
- -----------------------------------------------------------------------------------------------------------------------
FIRM VALUE/LTM PROJECTED EPS GROWTH (b) 1999 P/E
- -----------------------------------------------------------------------------------------------------
REVENUE EBITDA EBIT 1996-1997 3-YEAR 5-YEAR GT.
- -----------------------------------------------------------------------------------------------------
(d) AgriBio Tech and (ABTX) 1.4x 40.8x 46.2m NM 30.0% 1.7m
DEKALB (DKB) 6.8 71.2 NM NM 20.0% 3.9
Delta and Pine Land (DLP) 9.8 60.2 74.7 NM 30.0% 1.5
(e) Empresas La Moderna (ELM) 2.7 29.4 59.4 33.3% 15.2% 2.2
Monsanto (MTC) 5.1 22.3 31.7 16.5% 20.0% 2.4
Monday 4.2 NM NM NM 22.5% NM
Pioneer Hi-Bred (PHB) 4.0 16.1 20.0 24.8% 26.0% 1.2
- -----------------------------------------------------------------------------------------------------
MEDIAN 4.3x 35.1x 46.8x 1.9x
MEAN 4.9 40.8 46.4 2.1
- -----------------------------------------------------------------------------------------------------
OTHER DATA
----------
(f) DEKALB (DKB) 8/31 $ 33.38 (65.9%) $ 1,165 49.8x 26.3x 1,407
(g) Delta and Pine Land )DLP) 8/31 47.00 (13.0%) 1,942 NM 45.6 2,067
(h) Monsanto (MTC) 12/31 54.38 (9.9%) 32,567 52.8 43.3 37,742
(i) Monday 8/31 18.25 (28.4%) 662 NM NM 705
(j) Vilmorin (RIN) 7/30 108.84 (0.6%) 322 22.5 18.9 411
(f) DEKALB (DKB) 2.8x 28.8x 42.2x NM 20.0% 1.3x
(g) Delta and Pine Land (DLP) 10.2 62.9 78.1 NM 30.0% 1.5
(h) Monsanto (MTC) 4.9 21.5 30.5 16.5 20.0% 2.3
(i) Monday 3.2 NM NM NM 22.5% NM
(j) Vilmorin (RIN) 1.2 9.4 12.3 19.1% 12.0% 1.4
Note: EBITDA, EMT, Net income to Common, and EPS adjusted for unusual and
nonrecurring items.
LTM: Latest Twelve Months.
NM: Not Meaningful.
(a) Stock price as of July 31, 1998.
(b) 1998-1999 EPS: IBES Estimates.
5 Yr. growth: Salomon Smith Barney Estimates for ABTX (6/98), DKB (7/98),
MTC (4/98), and PHB (7/98). Long term growth for ELM, MYCO and RIN from
IBES
(c) Firm Value equals equity value (all fully diluted shares at the stock
price less any option proceeds) plus straight debt monetary interest,
straight preferred stock, all out-of-the-money convertibles, less
investments in unconsolidated affiliates and cash.
(d) Pro forma for amortized acquisitions.
(e) Sold major components of business. Pro forma financials (1997 A) taken
from Merrill Lynch report (3/98) 1998E EPS taken from Merrill Lynch
report (3/98).
(f) Stock price as of January 12, 1998, 30 days prior to sale announcement.
Excluded from mean and median calculations.
(g) Stock price as of April 13, 1998, 30 days prior to purchase announcement.
Excluded from mean and median calculations.
(h) Stock price as of May 1, 1998, 30 days prior to merger announcement.
Excluded from mean and median calculations.
(i) Stock price as of March 30, 30 days prior to Dow's announcement. Excluded
from mean and median calculations.
(j) French GAAP. Excluded from mean and median calculations as a non U.S.
traded company.
SALOMONSMITHBARNEY -32-
- --------------------
A MEMBER OF TRAVELERS GROUP
ANALYSIS OF COMPARABLE PUBLIC AGRICULTURAL
BIOTECHNOLOGY COMPANIES (AS OF AUGUST 3, 1998)
LTM MARGINS LTM RETURN ON AVERAGE ASSETS
----------------------------------------------------------- ---------------------------
OPERATING MARGINS GROSS PROFIT SC&A R&D EBITDA EBIT NET INCOME SALES EBITDA EBIT
- ------------------------------------------------------------------------------------------------------------------------
(d) AgriBioTech and (ABTX) 19.8% N/A NA 3.5% 3.1% NA NM 7.2% 6.3%
DEKALB (DKB) 46.3% 74.8% 14.9% 9.6% 6.5% 4.3% 95.6% 9.2% 6.2%
Delta and Pine Land (DLP) 33.0% 12.1% 7.9% 16.2% 13.1 6.8% 73.1% 11.9% 9.5%
(b) Empresas La Moderna (ELM) 30.2% 9.4% 5.9% 9.3% 4.6% (3.1%) 39.0% 3.6% 1.8%
(c) Monsanto (MTC) 59.1% 29.7% 13.3% 22.9% 16.1% 10.8% 67.2% 15.4% 10.8%
Monday 39.3% 30.9% 12.6% (9.9%) (15.3%) (16.8%) 72.1% NM NM
Pioneer Hi-Bred (PHB) 57.2% 28.4% 8.6% 25.1% 20.2% 14.2% 89.4% 22.4% 18.1%
(d) Vilmorin (RIN) 64.8% 30.4% NA 12.5% 9.6% 4.2% 85.3% 10.7% 8.2%
- ------------------------------------------------------------------------------------------------------------------------
MEDIAN 42.8% 28.4% 10.6% 11.0% 8.1% 4.3% 73.1% 10.7% 8.2%
MEAN 43.7% 23.7% 10.5% 11.2% 7.3% 2.9% 74.5% 11.5% 8.7%
- ------------------------------------------------------------------------------------------------------------------------
Note: EBITDA, EBIT. Net income to Common, and EPS adjusted for unusual and
nonrecurring items.
LTM: Latest Twelve Months.
(a) Pro forma for announced acquisitions.
(b) Sold major components of business. Pro forma financials (1997 A) taken
from Merrill Lynch report (Andrews).
(c) R&D reported as technological expense.
(d) French GAAP.
SALOMONSMITHBARNEY -33-
- --------------------
A MEMBER OF TRAVELERS GROUP
PRECEDENT M&A TRANSACTIONS (AS OF AUGUST 3, 1998)
THERE HAVE BEEN 5 ANNOUNCED TRANSACTIONS SINCE OUR INITIAL VALUATION
PRECEDENT TRANSACTIONS ANALYSIS
Selected Range
--------------
Monday Low High
- -----------------------------------------------------
LTM Revenues
Seeds $214.0 2.5x 3.5x
Intellectual Property 214.0 8.0 14.0
- -----------------------------------------------------
By examining the intellectual property component of Monday, and based on
discussions with DAS management, we arrived at an intellectual property
revenue weighting of between 5% and 20%.
BLENDED MULTIPLE ANALYSIS
Weight Multiple % of Value
----------------- ----------------- ------------------
Implied Equity
Monday Int. Prop. Seed Int. Prop. Seed Value Per Share (a) Int. Prop. Seed
- -------------------------------------------------------------------------------------------------------------
LTM Revenues $214.0 20% 80% 11.0x 3.0x $25.54 48.3% 51.7%
15% 85% 11.0 3.0 23.28 39.7% 60.3%
10% 90% 11.0 3.0 21.02 29.3% 70.7%
5% 95% 11.0 3.0 18.76 16.4% 83.6%
- -------------------------------------------------------------------------------------------------------------
(a) Fully Diluted Shares Outstanding = 37.9 million. Net debt = $16.7 million.
SALOMONSMITHBARNEY -34-
- --------------------
A MEMBER OF TRAVELERS GROUP
RECENT COMPARABLE M&A TRANSACTIONS (AS OF AUGUST 3, 1998)
5 PRECEDENT TRANSACTIONS TOOK PLACE AFTER DOW'S PROPOSAL
($ IN MILLIONS, EXCEPT PER SHARE AMOUNT)
Transaction Details Acquisition Multiples
----------------------- ---------------------------
Implied Enterprise
Date Ann. Target Business Description Acquiror Value Sales EBITDA EBIT
- ---------- --------------------- -------------------- ------------------- ----------------------- ----- ------ ------
07/15/98 Plant Breeding Intl Winter wheat seed Monsanto $522 19.6x NA NA
Cambridge producer and plant
breeding development
06/29/98 Cargill International Corn, sunflower and Monsanto 1,400 4.7x NA NA
seed businesses grape seed producer
06/29/98 Hungnong and Choong Vegetable seed Seminis NA NA NA NA
Ang Seed producers
06/29/98 LSL Biotechnologies Enhanced shelf life Seminis 27 NA NA NA
seed producer
05/11/98 Dekalb Genetics Corn seed producer Monsanto 3,918 8.4x 61.8x 80.5x
05/11/98 Delta and Pine Land Cotton seed producer Monsanto 1,944 10.1x 73.6x 95.2x
SALOMONSMITHBARNEY -35-
- --------------------
A MEMBER OF TRAVELERS GROUP
COMPARABLE M&A TRANSACTIONS (AS OF AUGUST 3, 1998)
10 PRECEDENT TRANSACTIONS DRIVEN BY SEED VALUATIONS WERE IDENTIFIED:
($ IN MILLIONS, EXCEPT PER SHARE AMOUNT)
Transaction Details Acquisition Multiples
--------------------------------------------- ---------------------------
Implied Enterprise
Date Acq. Target Acquiror Value Consideration Sales EBITDA EBIT
- ---------- --------------------- ------------------ ------------------- ----------------------- ----- ------ ------
* 04/20/98 Dinamilho Carol Monday $28 N.A. 2.3x N.A. N.M.
Productos Agricolas
* 11/24/97 Agroceres (Brazil) Monsanto 230 N.A. 2.1x N.A. N.A.
09/16/97 Sunseed AgrEvo N.A. N.A. N.A. N.A. N.A.
08/07/97 Pioneer Hi-Bred DuPont 8,570 $1,710 for 20% 4.8x 19.0x 23.6x
12/12/96 Verncuil Holding Monday N.A. Purchased 18.75% of N.A. N.A. N.A.
Verncuil in exchange
for Monday's European
seed business
10/01/96 Morgan Seeds Monday 27 Cash 1.1x N.A. N.A.
09/24/96 Asgrow Monsanto 240 Cash N.A. N.A. N.A.
Agronomics (Seminis)
05/21/96 Sure Grow Group Delta & Pine Land 70 Stock N.A. N.A. N.A.
03/11/96 Dekalb Genetics Monsanto 462 $152 for 10% of voting 1.3x 11.9x 16.8x
stock, and 39% of non-
voting stock
02/21/95 Delta & Pine Land Monday Plant N.A. N.A. N.A. N.A. N.A.
Science
----------------------------------------------------
Mean 2.3x 15.5x 20.2x
Median 2.1x 15.5x 20.2x
----------------------------------------------------
Source: Securities Data Company, Bloomberg News Services, and SEC filings.
Note: For private firms with undisclosed financial statements, Implied
Equity Value is assumed to be Implied Enterprise Value.
* Dow AgroSciences estimates.
(CONTINUED ON NEXT PAGE)
SALOMON SMITH BARNEY -36-
- --------------------
A MEMBER OF TRAVELERS GROUP
COMPARABLE M&A TRANSACTIONS (AS OF AUGUST 3, 1998) (CONTINUED)
12 PRECEDENT TRANSACTIONS DRIVEN BY INTELLECTUAL PROPERTY VALUATIONS WERE
IDENTIFIED:
($ IN MILLIONS, EXCEPT PER SHARE AMOUNT)
Transaction Details Acquisition Multiples
--------------------------------------------- ---------------------------
Implied Enterprise
Date Acq. Target Acquiror Value Consideration Sales EBITDA EBIT
- --------- --------------------- ------------------ ------------------- ----------------------- ----- ------ ------
04/06/98 Seed breeding program Phytogen Seed N.A. N.A. N.A. N.A. N.A.
(Monday & J.G.
Boswell)
01/06/98 Phytogen Cotton Monday N.A. $12 in cash, breeding N.A. N.A. N.A.
materials, licenses,
and patents
11/24/97 Mendel Biotechnology Monsanto/ELM $150 $30 in cash for 20% N.A. N.A. N.A.
05/13/97 Mogen Zeneca 75 N.A. 11.7x N.A. N.A.
04/01/97 Calgene Monsanto 594 $240 in cash for 3.0x N.M. N.M.
remaining 45%
01/06/97 Holden Monsanto 1,020 Purchase of Holden and N.A. N.A. N.A.
2 seed distributors
08/17/96 Plant Genetic Systems Hoechst Schering 739 Purchase 75% of PGS 96.2x N.A. N.A.
(PGS) AgrEvo
07/31/96 Calgene Monsanto 1,077 $50 in cash for 5.7% 10.3x N.M. N.M.
(and control)
04/08/96 Agraceius-Transgenic Monsanto 150 Cash N.A. N.A. N.A.
Plant Business
01/29/96 DNA Plant Technology Bionova (Empresas N.A. Contributes Bionova for N.A. N.A. N.A.
La Moderna) 70% in new entity
06/28/95 Calgene Monsanto N.A. Acq. of 49.9% stake for N.A. N.A. N.A.
$30 + contribution of
patents and equity
interest in Gargiulo
01/06/94 Monday Plant Science Monday N.A. $7 in cash + shares for N.A. N.A. N.A.
29.5% interest
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Mean(1) 8.3x N.A. N.A.
Median(1) 10.3x N.A. N.A.
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Source: Securities Data Company, Bloomberg News Services, and SEC filings.
Note: For private firms with undisclosed financial statements, Implied
Equity Value is assumed to be Implied Enterprise Value.
(1) Does not include outlier (PGS)
SALOMON SMITH BARNEY -37-
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A MEMBER OF TRAVELERS GROUP