Monsanto Shares Down as Lawsuit Draws Publicity

Monsanto Co. shares fell sharply again Tuesday as a major product-liability lawsuit continued to draw unwanted publicity for the chemicals conglomerate, although some analysts were saying that the selling had been overdone.

The company’s stock fell $3.25 to $80.125, after a $3.125 drop the day before, amid safety concerns over its G. D. Searle & Co. unit’s Copper-7 intrauterine device.

The drop in the stock was enough to prompt analysts at Merrill Lynch & Co., Shearson Lehman Hutton, Smith Barney, Harris Upham & Co., Prudential-Bache Securities and Mahon, Nugent & Co. to renew buy recommendations, saying the stock is now a bargain, traders said.

The selling began after internal Searle documents pertaining to the IUD were unsealed by a federal judge Friday. They showed that the company may have misled the government about the product’s hazards. But analysts said the documents contained no new information that claimants against the company did not already know.

Drew Parallels

The case against Searle quickly drew parallels to the case of A. H. Robins Co., still in bankruptcy due to lawsuits filed against it alleging injuries linked to its Dalkon Shield intrauterine device.

“People get frightened. They know about A. H. Robins, and this is a pretty scary story,” said John Henry, a chemical analyst at Merrill Lynch who suggested that investors take advantage of the recent selling to pick up a bargain.

“The unsealed documents were always available and remain available to the plaintiffs and their lawyers,” said James Wilbur of Smith Barney, based on talks with the company. The only difference now is that the information has been exposed to the public, he said.

Wilbur, as well as other analysts, do not expect the information to give rise to many new claims.

“Searle is ready to answer all of these questions in court,” Bill Greener, a spokesman for Monsanto, said after the initial disclosures were made.

Robert Reitzes of Mahon Nugent said Monsanto’s track record in defending itself against IUD liability claims has been strong and should continue to be relatively successful.

The company has lost three of the 17 cases that have gone to court. One of those three cases is being appealed. Searle has also settled hundreds of cases for an average of $10,000 to $20,000 each.