Bristol-Myers Seals a Deal to Take Over DuPont's Drug Unit - TheStreet

As expected,

Bristol-Myers Squibb

(BMY) - Get Report

said today it would purchase the pharmaceutical unit of

DuPont

(DD) - Get Report

for $7.8 billion in cash to increase its portfolio of prescription drugs.

A deal between Bristol-Myers and DuPont had been rumored for a week. Rival drug maker

Novartis

(NVS) - Get Report

was also reportedly in the hunt for the DuPont unit.

Last year, DuPont Pharmaceuticals posted sales of $1.5 billion from drugs such as AIDS medication Sustiva and Coumadin, a blood thinner. The unit also has several drugs in development, including a new antidepressant/anxiety-fighting medicine.

Bristol-Myers needs an injection of new drugs because many of its own are set to come under competitive pressure from generic versions.

"This acquisition is an important step in aggressively implementing our growth strategy, which envisions expanding our medicines business through acquisitions, joint ventures, licensing and co-promotion agreement," Bristol-Myers CEO Peter Dolan said in a statement.

The purchase is expected to close by the end of the year and will add 6 cents to 8 cents to Bristol-Myers' earnings in 2003, the company says. The purchase will knock between zero and 3 cents from the company's 2002 earnings. As a result of the transaction, the company also will record a one-time charge in the range of $2 billion to $3 billion.

DuPont says it will use a portion of the deal's proceeds to complete a current $2.5 billion share-buyback program. The company's board of directors also has authorized a new $2 billion share-buyback program to begin once the current program is complete.

Shares in Bristol-Myers closed Thursday up 8 cents to $56.68. DuPont shares closed up 49 cents to $46.83.