Upjohn To Sell Polymer
May 03, 1985
By Michael L. Millenson
Upjohn Co. said
Thursday it will sell its polymer and chemical operations to Dow
Chemical Co. for an undisclosed price and concentrate on its
health care and agricultural products businesses. In
response, Upjohn stock, already up sharply in recent weeks, rose
another $2.75 a share to $86.37 in active trading at mid-day on
the New York Stock Exchange. The company, based in Kalamazoo,
Mich., has drawn investor attention as it completes final
testing of topical minoxidil, a preparation that has shown some
effectiveness in treating and preventing male pattern baldness.
chemical operations accounted for $287.4 million, or 13 percent,
of Upjohn`s 1984 revenues of $2.2 billion. Upjohn will retain
its fine chemical and pharmaceutical chemical operations, which
accounted for $37.6 million in 1984 sales. Losses from the
polymer chemical operations last year offset profits in fine and
pharmaceutical chemicals for a total division loss of $9
million, an Upjohn spokesman said.
Jr., chairman and chief executive officer of Upjohn, said the
divestiture, which is subject to regulatory approval, would not
have a material effect on earnings. He added: "It will provide a
favorable contribution to cash flow. The resources that will be
available as a result of this sale will be of significant
benefit to the company when employed in our other businesses."
Harshbarger, an analyst at Hayes & Griffith Inc., a Chicago
investment banking firm, called the move ``a long-term
positive`` for the company. Although the chemicals unit was
expected to post an operating profit of about $5 million this
year, it`s disposal will enable Upjohn to concentrate on health
care, Harshbarger said. Upjohn acquired
the polymer chemicals business in 1963. It represented both a
diversification attempt and a fit in its manufacturing processes
with Upjohn`s then-dominant pharmaceuticals, steroids. However,
in a recent interview, Parfet acknowledged that the business no
longer seemed to fit Upjohn`s long-range needs, especially
because of the capital investment needed to remain competitive.
business includes facilities and shares of joint ventures in the
United States, Japan, Portugal and the Netherlands.