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MONSANTO TO GET $154 MIL. FROM SALE OF SEARLE's HOLDING IN PEARLE

Executive Summary

MONSANTO TO GET $154 MIL. FROM SALE OF SEARLE's HOLDING IN PEARLE Health Services under a $33 per share tender offer for all of the optical store chain by Grand Met USA, a unit of London, England-based Grand Metropolitan PLC. Grand Met announced on Aug. 9 that it had reached a "definitive agreement" with Searle to buy the pharmaceutical firm's 40% equity holding in Pearle at $33 a share. In addition, the Pearle board of directors has approved the offer and is recommending that shareholders tender their shares. Monsanto had indicated in its tender offer for Searle that it was interested in divesting Searle's interest in Pearle. The $154 mil. return from the Pearle stock sale could be used to retire some of the debt Monsanto will incur in its $2.8 bil. acquisition of Searle. Monsanto has also said that it will attempt to sell its oil and gas business segment in order to finance the Searle purchase. Grand Met will pay a total of approximately $386 mil. for Pearle's 11.7 mil. outstanding shares. The $33 per share price represents a 25% premium over Pearle's closing price of 26-5/8 on Friday, Aug. 9. Prior to Monsanto's purchase announcement for Searle, Pearle stock was hovering in the 23-25 point range. In addition, Grand Set is paying roughly 18 times net earnings for Pearle. For the first six months of 1985, Pearle reported sales up 8.3% to $194.9 mil. accompanied by a modest 2% gain in net earnings to $11.4 mil. The tender offer is expected to be completed in September, Pearle said. Pearle has granted to Grand Met an option to buy 3.2 mil. unissued Pearle shares at the $33 per share offering price.
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