When Bristol-Myers Squibb (BMY
), a badly battered drugmaker, was trading at 31 in mid-April, this column cited some analysts who figured the shares were headed lower--to 22 to 23. The stock hit 19.49 on July 11. It has since edged up, to 25 on Aug. 28. Now, some pros say the world's No. 5 pharmaceutical house, although beset by generic rivals and a Securities & Exchange Commission probe of its inventories, is on the way to recovery. What's more, hostile bids for Bristol may be in the wings. Add to this mix whispers that Goldman Sachs, Bristol's investment bank, has found a likely partner: Aventis, formed in 1991 by the merger of France's Rhone-Poulenc and Germany's Hoechst. Aventis, which focuses on oncology and on cardiovascular and respiratory diseases, has a market cap of $50 billion--about equal to Bristol's. Analysts say Bristol would prefer a merger of equals to a buyout.
Neil Sweig of Fulcrum Global Partners says others have expressed strong interest: Britain's GlaxoSmithKline, the world's No. 2, and Switzerland's Novartis, No. 7. "Both have the market cap and money to buy Bristol." He says Bristol is worth $70 billion in a buyout, or 35 a share. Bristol declined comment.
Given its woes, and in the wake of Bristol's troubled link with ImClone, "merger is Bristol's best option," says Richard Evans of Sanford C. Bernstein, who rates the stock "market-perform." Sweig rates Bristol a buy--based on prospects for new products that, he adds, are "on the brink of approval." Sweig says Abilify, Bristol's schizophrenia drug, is a "potential blockbuster" and could get a Food & Drug Administration O.K. "very soon." Eli Lilly's rival drug, Zyprexa, had 2002 global sales of $3.7 billion, estimates Sweig. Abilify's sales could reach $2 billion, he says. Sweig expects Bristol to seek approval for two other important drugs later this year.
By Gene G. Marcial
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