PFIZER UNVEILED a $68 billion (€51.5 billion) takeover of rival drugmaker Wyeth yesterday, reasserting its position as the world’s largest pharmaceuticals group and paving the way for a fresh bout of consolidation across the sector.
The acquisition – to be paid for using equal amounts of cash, equity and debt – creates a group with $71 billion in sales from a broad range of products and plans to save $4 billion in annual operating costs by cutting 15 per cent of its combined workforce.
The scale of the group, and the restructuring it will trigger, is likely to spark other pharmaceuticals mergers and acquisitions (M&A) that have been held back while awaiting Pfizer developments.
Bankers said the transaction would also boost confidence by demonstrating that cash-rich companies could still find opportunities amid the market turmoil.
“This is the first time in months that we have seen an old-fashioned M&A deal, complete with financing and it has cheered the market,” one banker said.
The deal is the eighth-largest M&A involving a US target, according to Reuters, which estimated that the seven advising banks could earn as much as $150 million in fees. It is also the third largest globally in the sector after Pfizer’s previous $89 billion acquisition of Warner Lambert in 1999 and the $79 billion GlaxoSmithKline merger in 2000.
Jeffrey Kindler, Pfizer’s chief executive, said: “The combination of Pfizer and Wyeth provides a powerful opportunity to transform our industry . . . This is a very positive sign for the American economy . . . and shows that the banks are doing what they are supposed to be doing.”
Pfizer had been under growing investor pressure to boost its performance as a series of top-selling drugs come off patent, led by the loss of exclusivity in 2011 of Lipitor, the cholesterol-lowering medicine that contributes a quarter of current annual sales. In a sign of its difficulties, the firm reported a 4 per cent fall in fourth-quarter sales to $12.4 billion. – ( Financial Timesservice)
