Keep Holding Gucci Group

Plus: analyst's opinion on IMC Global

Gucci Group (GUC ): Maintain 3 STARS (hold)

Analyst: Dennis Milton

S&P notes the stock now is trading ex-dividend to reflect a special $7/share dividend to be paid to all minority shareholders. The dividend is part of the terms of takeover agreement with majority owner Pinault-Printemps-Redoute, which currently owns about 53% of Gucci. Pinault is required to make an offer for the remaining Gucci shares by April 2004 at a minimum price of $101.50 per share. Shareholders have the right but not the obligation to accept the offer. S&P sees upside potential from Pinault agreement and Gucci's own EPS prospects already adequately in Gucci's share price. S&P does not advise buying additional shares at the moment.

IMC Global (IGL ): Raising to 5 STARS (buy) from 3 STARS (hold)

Analyst: Richard O'Reilly

Refocused on fertilizers, the producer and distributor of crop nutrients is benefiting from recovering industry fundamentals. IMC global recently sold the bulk of its discontinued businesses, including the salt unit for $620M, with the proceeds being used to pay debt. While the company is expected to have Q4 loss of about $0.10 per share on still low phosphate prices, it sees EPS of $0.20 for 2002. The company also anticipates higher volumes of phosphate and potash in 2002 with greater domestic farm acres, and higher shipments to China, which is the largest export market. Profits also will benefit from a lower number of idle plants and energy costs.

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