Analysts' Eyes On Warner-Lambert

Analysts are once more looking at Warner-Lambert with dollar signs in their eyes, but its chief executive Melvin Goodes has again denied plans to sell off any of its three businesses. Still, given the current consolidation fever in the sector, W-L's increasing strength in consumer products, and its small-but-profitable drug business, makes it interesting.

It is that ever-stronger consumer products sector that has captured people's fancy; sales in that division rose 18% to $4.34 billion last year. Drug sales fell 2% to 2.08 billion in 1994, with Lopid (gemfibrozil) - which makes up the bulk of W-L's drug revenues, falling to $308 million. However, sales of Accupril (quinapril) increased 36% to $226 million.

With a price tag of between $110 and $120 per share (a 38%-50% premium on the current $79.75 price tag), the $15 billion cost of a takeover would make it the second largest ever, behind Kohlberg Kravis & Roberts' $24.9 billion buyout of RJR Nabisco in 1989 and ahead of Glaxo's $14 billion offer for Wellcome. So far, the largest merger in the health care sector is still that of Bristol-Myer's 1989 purchase of Squibb for $12.7 billion.