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Pfizer seals $68bn Wyeth purchase

January 26 2009 11:39. Pfizer on Monday confirmed a deal to buy Wyeth, a rival US drug maker, for about $68bn in a move that will reshape the global drug industry. Pfizer will pay the equivalent of $50.19 a share in cash and stock for Wyeth as it attempts to address concerns over its ability to offset upcoming patent expirations on its blockbuster drugs, including cholesterol-fighting drug Lipitor. It has agreed to pay $33 in cash and 0.985 of a share of Pfizer stock for each Wyeth share. The two companies spent Sunday hammering out that exchange ratio and other final terms of the deal, including details on who would fill a few remaining seats on the combined companies’ board of directors. Pfizer, which expects to raise $22.5bn to help fund the deal, has lined up financing commitments from Bank of America/Merrill Lynch, JP Morgan and Goldman Sachs and remains in talks to bring other banks into the group. Jeffrey Kindler, Pfizer chief executive, who approached Wyeth months ago about a potential merger, is poised to be chief executive of the combined company. “The new company will be an industry leader in human, animal and consumer health. With our combined biopharmaceuticals business, it will lead in primary and specialty care as well as in small and large molecules. Its geographic presence in most of the world’s developed and developing countries will be unrivalled,” Mr Kindler said in a statement. Pfizer said it expected the Wyeth deal to be accretive to adjusted diluted earnings per share in the second full year after closing, and anticipated cost savings of approximately $4bn by the third year after closing. Like Pfizer, Wyeth is facing patent expirations on several key drugs. But it has strong vaccines and biotech businesses, and the two companies could save billions of dollars in costs by combining. Pfizer may not be the only drug maker with an interest in Wyeth, and the drug sector has been a rare area in which corporate buyers have shown aggression in the past six months despite the downtrodden economy. Bristol-Myers Squibb recently lost out in an effort to buy ImClone after Eli Lilly came forward with a higher offer. Given the tight credit markets, however, Pfizer may face a diminished interloper threat for a deal of this size. Rival drug giant Roche, for example, is mired in an attempt to take over Genentech, and Novartis is thought to be building up its coffers to acquire a greater stake inAlcon. Pfizer has been receiving advice on the deal from Merrill Lynch and Goldman Sachs, while Morgan Stanley and Evercore have been advising Wyeth. Meanwhile, shares in Dutch vaccine maker Crucell plunged on Monday after it said that Wyeth had withdrawn from talks over a friendly takeover deal.