Pfizer Offers $68 Billion for Wyeth

123jump.com Staff
26 Jan, 2009
New York City

Pfizer offers $68 billion for Wyeth. The largest deal between two pharmaceutical companies in a decade will create one of the largest and diversified drug companies in the world.

[R]11:00AM New York – Pfizer offers $68 billion for Wyeth. The largest deal between two pharmaceutical companies in a decade will create one of the largest and diversified drug companies in the world.[/R]

Pfizer agreed to acquire Wyeth for $68 billion or $50.19 in per share. The largest deal between the two drug companies comes at a time when Pfizer is searching for new drugs and in the market environment where the deal making has come to a halt.

The boards of directors of both companies have approved the deal.

Each shareholder of Wyeth will be converted to $33 a share and will receive 0.985 share of Pfizer common stock. The stock is worth $17.19 based on the closing price of Pfizer on Friday. The Wyeth shareholders will receive 16% Pfizer outstanding shares.

The combined company expects to save $4 billion by the end of third year after closing and the transaction will be financed through a combination of cash, debt and stock.

A consortium of banks will provide a debt of $22.5 billion, Pfizer will spend $22.5 in cash and the rest of the deal will be financed with Pfizer share. Bank of America and Morgan Stanley will split advisory fees of more than $220 million.

The Pfizer deal is the second largest since Glaxo Wellcome Plc acquired SmithKline Beecham Plc for $76 billion in 2000 followed by a deal between two France based companies Sanofi SA and Aventis SA for $64.4 billion in 2004.

Pfizer will cut its quarterly dividend in half from the second quarter to 16 cents per share, close five factories and eliminate 19,000 people from the combined company.

Pfizer was advised by Bank of America, Merrill Lynch, Goldman Sachs and JP Morgan. Citigroup and Barclays were financial advisors. Wyeth was advised by Morgan Stanley and Evercore Partners.

Wyeth withdrew from its discussion to acquire Crucell N.V., the Netherlands based bio tech company.

Pfizer reported its fourth quarter earnings which dropped nearly 90% on a charge of $2.3 billion. In the fourth quarter the earnings dropped to $266 million or 4 cents a share or $2.9 billion or 40 cents a share.

In trading, Wyeth ((WYE)) rose 25 cents to $43.99 and Pfizer ((PFE)) decreased $1.46 or 8.4% to $15.99.