Is Warner Lambert On The Block?

Takeover frenzy in the pharmaceutical industry has picked up, fueled by American Cyanamid's acceptance of a sweetened $101-a-share from American Home Products. The question titillating the Street: "Who's next?"

High on the takeover-target list is Warner-Lambert, a maker of prescription and over-the-counter drugs. Whispers are that management, feeling the buyout pressure as the stock climbed--from 60 in March to 791/2 lately--is considering selling its drug operations, which analysts figure would bring $45 to $50 a share. Warner-Lambert will have no difficulty finding a buyer, says one New York investment manager. Sales hit $5.7 billion last year.

As an alternative move, according to this pro, Warner-Lambert may spin off parts of its two other units: consumer health care and the gum-and-mints operation. Health-care products include Listerine, Bromo-Seltzer, and Schick and Wilkinson Sword razors. Gum and mints include Dentyne, Trident, Clorets, and Certs. The units are estimated to be worth $60 a share.

Warner-Lambert has a breakup value of about $100 a share, figures Mike Metz of Oppenheimer. He says he wouldn't be surprised if Warner-Lambert broke up the company to stave off a buyout offer. But analyst Neil Sweig of Ladenburg Thalmann predicts Warner-Lambert will be acquired by a larger company this year. European giants Ciba-Geigy, Glaxo, and Hoffmann-La Roche are possible buyers. Warner-Lambert declined to comment.

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