CP Kelco Files Federal Lawsuit Against Pharmacia for Fraud; Claims $430 Million in Actual Damages and Seeks Punitive Damages.

Business Editors

WILMINGTON, Del.--(BUSINESS WIRE)--April 12, 2001

Alleges Monsanto Engaged In Fraudulent Conduct In

Connection With Sale Of Kelco Unit

CP Kelco ApS, a global leader in food gums, today announced that its U.S. subsidiary has filed a lawsuit in the U.S. District Court for the District of Delaware against Pharmacia Corporation (NYSE: PHA) for fraudulent conduct in connection with the sale of Monsanto Company's Kelco biopolymers unit to CP Kelco, a transaction which closed in September, 2000. Monsanto had merged with Pharmacia in April, 2000. The suit claims at least $430 million in actual damages. CP Kelco is also seeking punitive damages in an amount to be determined by a jury.

The complaint alleges, among other things, that during the sale process, Monsanto and Pharmacia engaged in "deceptive and manipulative conduct" and made numerous materially false representations to CP Kelco about Kelco's business, including information related to its customers, production facilities, products, competitors and inventory as well as its financial results, which directly resulted in substantial financial loss to CP Kelco. Furthermore, it alleges the defendants knew that their representations were false and misleading when they were made.

The lawsuit alleges that Pharmacia and Monsanto not only repeatedly supplied deliberately overstated financial projections to CP Kelco, but also fraudulently failed to disclose the existence of Kelco's actual internal projections, which were materially lower.

Harry Tucci, Chairman and CEO of CP Kelco, stated, "CP Kelco today is a healthy company with leading market share in its core businesses, and we continue to believe that the strategic combination of the Hercules and Kelco food gums businesses is a powerful one. However, we believe Monsanto's persistent fraud, as their internal documents clearly demonstrate, induced us to pay a substantially inflated purchase price. As a result, we are compelled to bring suit to protect the interests of CP Kelco, its shareholders, its bank lenders and investors in its publicly placed bonds."

CP Kelco was formed in 2000 from the combination of the Copenhagen Pectin/Food Gums Division of Hercules Incorporated and the Kelco Biopolymers business of Monsanto Company. CP Kelco is the global leader in the hydrocolloids (thickeners and stabilizers) market, with #1 positions in xanthan and pectin and a strong position in carrageenan. The Company has more than 2,000 customers in over 100 countries, with headquarters in Delaware, and facilities in North America, Europe, Asia and Latin America. CP Kelco is 71%-owned by Lehman Brothers Merchant Banking Partners II L.P., which is managed by the merchant banking arm of Lehman Brothers Holdings (NYSE: LEH), and 29%-owned by Hercules Incorporated (NYSE: HPC).