Mycogen Corp. said Thursday that it signed a definitiveagreement to form a previously announced partnership toacquire Lubrizol Corp.'s agricultural seed and plant sciencedivision. Mycogen valued the deal at $135 million.
Mycogen of San Diego is to hold a 51 percent interest in thepartnership, with Lubrizol of Wickliff, Ohio, owning theremainder. The transaction, which has been approved by theboards of both companies, still faces a vote of Mycogenshareholders.
Announced last April, the deal includes Lubrizol's AgrigeneticsCo. The partnership will operate as a plant science division ofMycogen, which already has a biopesticide division andSoilserv Inc., a wholly owned subsidiary that provides farmerswith customized crop protection services.
Combining Mycogen's biopesticide and Lubrizol's pest-resistanttransgenic plant technologies, the partnership should enjoy acompetitive edge in the crop-protection market, Mycogen saidlast spring. The partnership expects to market its plant-protectant technologies through Agrigenetics' sales channels,which is ranked as the sixth largest U.S. crop seed supplier.
Mycogen's stock (NASDAQ:MYCO) closed Thursday at $13.50 ashare, up 37 cents.
The transaction calls for Mycogen to transfer to Lubrizol 2.3million shares of its common stock and $39.4 million of a newseries of its preferred stock. At Mycogen's closing stock priceon Thursday, the 2.3 million Mycogen shares would be valuedat $30.9 million. Already a major Mycogen shareholder,Lubrizol would own nearly 25 percent of Mycogen withcompletion of the deal.
In addition, the new preferred stock would be convertible intoMycogen common stock at any time during the first four yearsat $17.94 a share and $18.72 thereafter. Lubrizol agreed not toacquire any additional Mycogen shares without approval ofMycogen's board, which can call for redemption of thepreferred stock after eight years.
Mycogen said it planned to distribute proxy materials to itsshareholders by the end of next month and schedule a specialshareholders meeting for sometime in October.
Lubrizol made an initial $6 million equity investment inMycogen in April 1990. It previously signed two researchcontracts with Mycogen for work on potent protein biotoxinsfor use against certain insects.
A long-standing investor in biotechnology, Lubrizol recorded a$102 million gain in 1990 from the sale of stock in GenentechInc. in which its was an early backer.
(c) 1997 American Health Consultants. All rights reserved.