Deal Said to Be Near for Pfizer’s Purchase of Warner-Lambert
NEW YORK — Pfizer Inc. could wrap up a bitter, three-month takeover battle for Warner-Lambert Co. as early as the end of the week with a deal worth about $75 billion, people familiar with the situation said Sunday.
The combination of Pfizer, the No. 2 U.S. drug company and maker of impotence drug Viagra, with Warner-Lambert would create a pharmaceutical giant, second only to the proposed merger of British drug firms Glaxo Plc and SmithKline Beecham.
A deal with Pfizer also would scuttle Warner-Lambert’s proposed $56-billion merger with American Home Products Corp., the maker of Centrum vitamins as well as the Premarin line of female hormone replacement drugs.
Madison, N.J.-based AHP would stand to collect a $1.8-billion breakup fee and might also seek other compensation for its Warner-Lambert stock options if Warner-Lambert agrees to a deal with New York-based Pfizer.
Pfizer’s current offer for Morris Plains, N.J.-based Warner-Lambert stands at 2.5 Pfizer shares for each Warner-Lambert share, but Wall Street expects Pfizer to raise its bid to speed the negotiations.
Analysts have speculated that Pfizer could raise its bid to a range of 2.7 to 3 Pfizer shares for each Warner-Lambert share.
Warner-Lambert, maker of cholesterol drug Lipitor, Listerine mouthwash and Sudafed decongestant, and Pfizer on Sunday both said they continue to negotiate but declined further comment.
AHP also declined comment.
Shares of Warner-Lambert fell 88 cents to close Friday at $91.13, or about 2.6 times the value of Pfizer’s shares.
Shares of Pfizer rose 13 cents to close Friday at $35.19.
The proposed merger with AHP called for 1.4919 AHP shares for each Warner-Lambert share. AHP closed Friday at $44.25, down $3.75.
The negotiations with Pfizer gained momentum after Warner-Lambert’s talks with white knight Procter & Gamble Co. collapsed last week.
The two companies also would like to strike a deal before Feb. 14 when they are due to go to court in a dispute over their pact to jointly market Warner-Lambert’s Lipitor, said the sources familiar with the situation.
Pfizer made its unsolicited bid for Warner-Lambert in early November just hours after Warner-Lambert agreed to merge with AHP.
Warner-Lambert battled Pfizer’s advances for months in favor of its deal with AHP, but then bowed to investor pressure and agreed to talk to Pfizer earlier this month.
Some of Warner-Lambert’s large shareholders have said they don’t want the takeover battle to end up in court.
CalPERS, a shareholder in Warner-Lambert, Pfizer and AHP earlier this month issued a statement saying it wanted Warner-Lambert to explore each of its merger opportunities.
CalPERS spokesman Brad Pacheco on Friday said the pension fund “didn’t want it to end up in court because it could be costly and that gets passed on to shareholders.â€
“That’s probably the least [favorable] outcome we would like,†he said.
Dreyfus senior portfolio manager Tim Ghriskey agreed.
“Let’s get this thing done with--that would be our feeling,†he said, saying that a court battle would be expensive and “a waste of time and money.â€
But, he said, he expects Warner-Lambert to agree to a deal with Pfizer before the court date.
“I’d be very surprised if it was not settled by then,†he said.
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