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Pfizer Inc. to buy Pharmacia Corp. |
Current rating: 0 |
by the Associated Press, via Sehvilla
Email: smann (nospam) stu.parkland.cc.il.us (unverified!) |
15 Jul 2002
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NEW YORK (AP) - In a surprising blockbuster merger that would expand the reach of the world's largest drug company, Pfizer Inc. has agreed to buy rival Pharmacia Corp. for $60 billion in stock. |
Pfizer to Buy Pharmacia in $60B Deal
Mon Jul 15, 8:18 AM ET
By MICHAEL WEISSENSTEIN, Associated Press Writer
NEW YORK (AP) - In a surprising blockbuster merger that would expand the reach of the world's largest drug company, Pfizer Inc. has agreed to buy rival Pharmacia Corp. for $60 billion in stock.
Related Quotes
PFE
28.02
-4.18
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Quote Data provided by Reuters
The deal announced Monday would create a company that produces many of the common prescription drugs found in medicine cabinets around the world. It comes as drug companies are under enormous pressure to keep costs low even as they search for new drugs and face competition from cheaper generic versions of their older ones.
Already the world's biggest drug company before the deal, Pfizer's products include Viagra (anti-impotence), Lipitor ( news - web sites) (cholesterol) and Zoloft (depression), while Pharmacia's major drug is the arthritis medication Celebrex.
Pharmacia also makes the Rogaine hair products and the Nicorette smoking cessation line. Pfizer's over-the-counter products include Listerine mouth wash and Rolaids tablets to Halls cough drops and Visine eye drops.
The new company would have combined annual revenue of $48 billion and a research-and-development budget of more than $7 billion.
"By combining with Pharmacia, we are ensuring that our core capabilities in the discovery, development and commercialization of new medicines are strong around the world," said Hank McKinnell, chairman and chief executive officer of Pfizer.
The timing of the deal is surprising considering the overall health of the economy and the many obstacles facing the drug sector.
Pharmaceutical companies are experiencing intense competition from generic drugs, pressure on prices from the federal government and a growing number of patents that are expiring. Their stock prices have fallen in recent months along with the rest of the market as distrust in corporate America grows almost daily amid several high-profile accounting scandals and bankruptcies.
The erosion of investor confidence and the downturn in the economy has created a major slump in merger and acquisition activity.
In the first six months of the year, only $200 billion in transactions in the United States was announced, according to Thomson Financial. At current prices, a Pfizer-Pharmacia merger alone would add up to more than a quarter of that amount.
Fred Hassan, chairman and chief executive of Pharmacia, said the deal "is a strategic opportunity that immediately creates a global pharmaceutical company with unsurpassed resources and capabilities."
Hassan would become vice chairman of Pfizer after the deal is completed.
The Pfizer-Pharmacia deal was first reported by The New York Times and The Wall Street Journal for Monday editions. Under the deal, Pharmacia shareholders would receive 1.4 shares of Pfizer stock for each share in Pharmacia. That represents $45.08 worth of stock based on Friday's closing Pfizer price and is a 36 percent premium over the Pharmacia's closing price of $32.59 a share on Friday.
The deal was approved by the boards of both companies but still needs approval from regulators and shareholders.
Pfizer, whose stock soared in the late 1990s with the success of Viagra, is no stranger to mega-mergers. In 2000, it completed a $115 billion acquisition of Warner-Lambert, gaining control the cholesterol-lowering drug Lipitor in the process. That deal ranks as one of the largest global mergers ever.
Pharmacia, based in Peapack, N.J., was created through the merger of Pharmacia of Sweden and Upjohn Co. The company has 59,000 employees in more than 60 countries.
Pfizer, based in New York City, employs about 90,000 workers.
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