Pfizer in Talks to Buy Wyeth

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Pfizer Inc. is in talks to acquire rival drug maker Wyeth in a deal that could be valued at more than $60 billion, said people familiar with the matter.

A combination of these two U.S. pharmaceutical giants would redraw the boundaries of the global drug industry, which has suffered from flagging product development and high fixed costs. It would also represent a high-stakes gambit for Pfizer, which has been stung in the past by expensive acquisitions.

The two sides have been in discussions for months and a deal isn't imminent, the people said. Given recent market volatility and overall economic uncertainty, the talks are especially fragile and could collapse, the people warned.

Pfizer spokesman Raymond F. Kerins Jr. said the company doesn't comment on "market rumors and speculation." A Wyeth spokesman said, "We don't comment on marketplace rumor."

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Pfizer Offers $66.8 Billion for Wyeth, Boards Meeting on Bid

Jan. 25 (Bloomberg) -- Pfizer Inc. would pay about $66.8 billion to acquire Wyeth in a bid being reviewed by the two boards today, according to people familiar with the talks. An agreement could be announced early this week.

Wyeth shareholders would get $50.19, including $33 in cash and 0.985 Pfizer shares, one of the people said. That’s a 29 percent premium to Wyeth’s price on Jan. 22, before word of the talks became public. Pfizer Chief Executive Officer Jeffrey Kindler, 53, will lead the combined company, two people said.

Pfizer, the world’s biggest drugmaker, gains the depression treatment Effexor and pneumonia vaccine Prevnar in the transaction, and may raise its annual sales by 46 percent to $70 billion. That would help the New York-based company offset some of the $12 billion in revenue it begins losing in 2011 when the Lipitor cholesterol pill gets generic competition. It may also spur consolidation in an industry buffeted by a thinning pipeline of new products and growing patent expirations.

“Pfizer’s labs weren’t able to create enough drugs to replace the Lipitor revenue,” said Les Funtleyder, an analyst with Miller Tabak & Co. in New York, in a Jan. 23 interview. “As that became more obvious, Pfizer felt like they had to do something. They could have decided to let Lipitor go away and become smaller. They are choosing the route of getting bigger.”

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19,000 to lose jobs

Pfizer, the world’s biggest drugmaker, will acquire its smaller peer in a cash-and-stock transaction valued at $50.19 a share, 29 percent more than the $38.83 closing price on Jan. 22, the day before talks were reported, the companies said today in a statement. Pfizer also will halve its quarterly dividend to 16 cents a share, fire 15 percent of the combined company’s workforce, or 19,000 people, and close five factories.

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19,000 to lose jobs

Pfizer, the world’s biggest drugmaker, will acquire its smaller peer in a cash-and-stock transaction valued at $50.19 a share, 29 percent more than the $38.83 closing price on Jan. 22, the day before talks were reported, the companies said today in a statement. Pfizer also will halve its quarterly dividend to 16 cents a share, fire 15 percent of the combined company’s workforce, or 19,000 people, and close five factories.

19,000? Scratch that. Make that 26,000.

Pfizer spokesman Ray Kerins said that two waves of job cuts would occur in 2009. In the first, Pfizer said it would cut 10% of its 81,900 staff - about 8,000 jobs.

Kerins said that Pfizer will launch the second round of job cuts once its merger with Wyeth and its 50,000 workers is completed in the third or fourth quarter. At that time, Kerins said Pfizer will cut 15% of the combined company's 120,000 or so workers - about 18,000 more job cuts.