PFIZER, THE US pharmaceuticals group, is in talks to acquire rival Wyeth in a deal that would create a drugs group with a combined market value of about $60 billion (€46 billion).
The two companies have been in on/off talks for six months, people close to the situation said, but these accelerated in recent weeks. A deal could be announced as soon as Monday.
However, those people cautioned that they were still negotiating final terms and any agreement between the two companies could still fall through.
Pfizer, sitting on a $25.5 billion cash pile, is understood to be offering about 40 per cent shares and 60 per cent cash. It is being advised by Merrill Lynch and Goldman Sachs. Wyeth is being advised by Morgan Stanley and Evercore. All parties declined to comment.
Pfizer and Wyeth have significant presence in Ireland. Pfizer first arrived in 1960 and now operates in Cork and Dublin, employing about 2,000. Wyeth, which recently developed an advanced biotech plant at Grange Castle outside Dublin, has five separate operations in Ireland, employing more than 3,000 in areas ranging from infant nutrition to animal health and biotech. It has had a presence in the State for 35 years.
The move comes as the world’s leading pharma companies face a slowdown in growth as revenues come under threat from the expiry of patents, shrinking pipelines and increased generic competition.
If successful, the deal could mark one of the biggest in a year where merger and acquisition activity across all industries has suffered a steep decline because of the difficulties of financing and could spur a wave of industry consolidation. Pfizer has been facing greater pressure than many of its peers, because its blockbuster anti-cholesterol drug Lipitor – which accounts for almost one-third of its revenue – goes off-patent in 2011.
A significant number of the Cork jobs are tied to the production of Lipitor.
Tim Anderson from Bernstein Research said: “[Pfizer] essentially has no realistic way of replacing the many drugs that are scheduled to go generic, apart from doing a mega-merger.”
A deal between Pfizer and Wyeth would yield a more diversified company with an attractive franchise in vaccines, as well as a move into consumer health products with more than $70 billion in sales and billions of dollars in targeted cost savings.
A deal would also give Pfizer a stake in the Alzheimer’s drug programme that Wyeth is involved in with Irish biotech group Elan. A change of ownership at Wyeth would not affect that alliance which is about to begin Phase III trials on one drug, bapineuzimab.
The agreement could affect Wyeth’s plans to consider the acquisition of Crucell, a Dutch vaccine-maker. But given Crucell’s status as one of the only independent vaccine-makers, Pfizer could also opt to fold it into its business.
