Bear Stearns Likes DuPont-Bristol Myers Drug Deal

Analyst Jeffrey Peck says the chemical giant will realize a higher-than-expected price -- about $5.8 billion after taxes -- for its drug unit

Bear Stearns says DuPont's (DD ) deal to sell its drug unit to Bristol-Myers Squibb is positive. Analyst Jeffrey Peck says the price is higher than expected. Using $2 billion in book value, he estimates DuPont will net $5.8 billion in cash after tax; he sees the deal accretive to DuPont's 2002 EPS by about $0.10. Peck notes the sale represents 16% of DuPont's entire market capitalization. Given previous expectations of valuation at about 10% of market capitalization, Peck thinks the sale could move DuPont's stock 5% in the very short term. He notes the company's ownership of half of Cozaar (Merck has the other half ) is not part of this deal. While previous deals (i.e.: sale of Conoco, purchase of Pioneer) have come under criticism, management can hang their hats on a upbeat deal. He reiterates his buy rating.

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