Bristol-Myers to Buy Drug Unit of DuPont

Bristol-Myers Squibb Co. agreed Thursday to buy DuPont Co.’s pharmaceuticals unit for $7.8 billion in cash, paying a premium to build up its line of AIDS and heart treatments as some of its biggest products face competition from generic drugs.

The acquisition is the biggest for the drug maker since Bristol-Myers merged with Squibb in 1989, Bristol-Myers said. Sales at DuPont’s drug unit, which makes AIDS drug Sustiva and clot-buster Coumadin, fell 8.6% to $1.49 billion last year.

New York-based Bristol-Myers has been seeking acquisitions to make up for setbacks in drug development and sales lost to competition from cheaper generic medicines. The company is expected to try to trim costs and restore sales growth at the unit, and to use DuPont’s drugs to help shore up its product line until Bristol-Myers’ experimental drugs come to market in a few years.

Bristol-Myers expects to cut as much as $600 million in costs by 2003, said Peter Dolan, president and chief executive.

Wilmington, Del.-based DuPont decided to shed the drug unit and focus on its chemical businesses after failing to increase the size of its drug business through a joint venture.

Gary Pfeiffer, DuPont’s chief financial officer, said DuPont expects the gain from the sale to be about $6 billion after taxes.

The announcement was made after the close of trading on the New York Stock Exchange. Bristol-Myers shares rose 8 cents to close at $56.68. DuPont shares rose 49 cents to $46.83.

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Back to the Core

By selling its drug business, DuPont plans to repay debt, complete a stock buyback and invest in its core chemical business. Its drug business had 2000 sales of $1.49 billion.

DuPont, monthly closes and latest on the NYSE

Source: Bloomberg News