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   As Drug Companies Merge, Will Consumers Be Left Crying in the Aisles?
Pfizer in Deal to Buy Warner-Lambert
For $85 Billion

By Noelle Knox   Associated Press
NEW YORK — Warner-Lambert Co. has tentatively agreed to a sweetened $85 billion takeover offer from Pfizer Inc., that would create the world's second-largest pharmaceutical maker, according to two people familiar with the negotiations.

The two companies were working out the details on Wednesday. Part of that equation will be how to placate American Home Products, the losing suitor in a 3- month fight for control of Warner-Lambert.

American Home had signed a $59 billion deal in November to acquire Warner-Lambert before Pfizer trumped the bid.

Pfizer, which is best known for its Viagra drug, will offer 2.75 shares, worth about $99, for each share of Warner-Lambert, maker of the blockbuster cholesterol drug Lipitor, said the sources who spoke on the condition of anonymity.

While Warner-Lambert shareholders would get 10 percent more of Pfizer's stock than its original offer, those shares are worth about 8 percent less today than they were when Pfizer first made its bid. Pfizer's original offer would have been worth $77 billion based on Wednesday's stock price.

Pfizer will have to pay a $1.8 billion breakup fee to American Home Products. And Pfizer may also have to make other concessions to American Home, which could still prevent Pfizer from using a favorable accounting treatment in its acquisition of Warner-Lambert. That could hurt Pfizer's profits.

All three companies declined to comment.

The combined company would have a wide range of medicines including the blood pressure-control drug Norvasc and the antidepressant Zoloft, as well as consumer products like Bubblicious Gum, Certs mints, Schick razors and Listerine mouth wash.

"This will be a formidable, global company that investors will be very happy with," said Tony Butler, an analyst with Lehman Brothers, who expects the company's profits will grow at 24 percent a year.

"They will have tremendous potential to be a force in any therapeutic area where they have entries, not just today, but in the future," he added.

The Pfizer-Warner-Lambert combination is part of an industrywide consolidation, and follows last month's announcement of deal that would combine Britain's Glaxo Wellcome and SmithKline Beecham to create the biggest drug company.

Despite the advantages of combining the research budgets and sales staffs of Warner-Lambert and Pfizer, the companies have waged a very public battle in recent months.

Both companies have filed lawsuits against each other, and Warner-Lambert had unsuccessfully sought a white-knight bidder to fend off Pfizer.

With such acrimony between the two chairmen, Wall Street does not expect Warner-Lambert's chairman and chief executive officer, Lodewijk J.R. de Vink, to have a role in the new company. Details, however, were not available Wednesday evening.

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