American Home Products ( AHP) said Wednesday it plans to reduce its majority stake in Immunex ( IMNX), a top biotech company based in Seattle, in a move that could raise up to $2.7 billion. But American Home denied that the move, which could cut its stake to 43% from 55%, was aimed at raising money to pay for rising costs to settle
diet-drug litigation , a cost that the company acknowledged could balloon far beyond its original estimates. That cost has become an albatross for American Home shareholders, and, until the matter is resolved, the company isn't likely to be able to acquire other drug firms or to be acquired, observers say. American Home said last month it may have to boost its reserves, currently about $3.3 billion, by "less than $5 billion" to pay for litigation from two diet drugs that were withdrawn in 1997. Analysts speculated the company could need as much as $3 billion more.