announced Friday that it was selling its sweetener operations, including the NutraSweet and Equal brands, to an investment group for $570 million in cash.
, whose institutional investors include
Pegasus Capital Advisors
, agreed to buy the business Monsanto has been looking to divest since initiating a debt-restructuring program last year.
Shares of Monsanto fell 1/2, or 1%, to 41 1/2 in early trading Friday. (Shares closed up 1/4, or 0.60%, at 42 1/4.)
"The unit was carried as a discontinued operation since the second quarter so it was completely expected," said Alex Hittle, an analyst at
A.G. Edwards & Sons,
who rates the stock a maintain. His firm has done no underwriting for Monsanto or
Pharmacia & Upjohn
, which recently agreed to acquire Monsanto.
Monsanto said the sweetener business was not crucial to its long-term strategy.
"They're trying to showcase and maximize their pharmaceutical business," Hittle said. "They had used Nutrasweet to get into the foods arena. It would keep a finger in the foods pot. It turns out that that vision was not the ideal strategy."
The deal does not include Neotame, a promising new sweetener ingredient currently under review by the
Food and Drug Administration
. But the closely related segments of sweetener ingredients and biogums are still in the process of being divested, according to Jeff Bergau, a company spokesman.
"In looking at Monsanto's portfolio, they took on a lot of debt to build the seed side, they needed to bring the debt down," Hittle said. In its core business, Monsanto makes genetically modified seeds to improve productivity and resist disease.