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
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
"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
"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.