NEW YORK (AP) _ Bristol-Myers Squibb Co. is buying the drug business of DuPont in a $7.8 billion cash deal that will give Bristol-Myers a larger inventory of important AIDS drugs.
DuPont said Thursday it plans to use a portion of the proceeds to complete a $2.5 billion share buyback program announced last July.
The remaining proceeds will be used to reduce debt and invest in growth opportunities in DuPont's core chemical business. DuPont's board also authorized a new $2 billion share buyback program.
Wilmington, Del.-based DuPont's best-selling drug last year was Sustiva, which had sales of $386 million and is a widely used part of the powerful combination therapy for treating AIDS.
Bristol-Myers, based in New York, sells Zerit and Videx, which are also important parts of AIDS therapy. DuPont has three AIDS drugs in development, and Bristol-Myers is working on new AIDS therapies.
AIDS activists have said they were uneasy about the deal because the consolidation could stifle competition among makers of expensive drugs used to treat the disease.
Analysts said earlier this week other pharmaceutical companies were probably interested in DuPont's drug business _ at a price tag of at least $6 billion _ but Bristol-Myers stood a better chance of clinching a deal because it has a huge U.S. presence and can more easily cut costs.
Analysts expect there to be some job cuts, primarily involving administrative jobs because Bristol-Myers would likely maintain DuPont's research and development and marketing staff.
Bristol-Myers did not immediately say whether there would be any staff reductions, but did say it expected the deal to start adding to earnings per share by 2003.
``This acquisition is an important step in aggressively implementing our growth strategy, which envisions expanding our medicines business through acquisitions, joint ventures, licensing and co-promotion agreements, as well as through our own intensive and productive research and development efforts,'' said Peter R. Dolan, Bristol-Myers' president and chief executive officer.
The deal, which still needs regulatory approval, is expected to be completed by the end of the year, the companies said.
DuPont shares closed up 49 cents, or 1 percent, to $46.83 in trading Thursday on the New York Stock Exchange, while Bristol-Myers shares closed up 8 cents to $56.68.