Pfizer, Wyeth Drug Companies to Merge In $68B Mega Deal

Pfizer Inc announced it has offered to acquire Wyeth, a rival drug maker, in a deal valued at $68 Billion.. Pfizer indicated this would increase it’s revenue by 50%, diversify it’s products beyond drugs and solidify it’s number 1 rank in the industry. Madison, New Jersey USA based Wyeth has a variety drug and other products, including major vaccines.

The deal is valued at $51 per Wyeth share compared to Wyeth’s Friday closing stock price of around $43. Pfizer will pay $33 in cash and 0.985 share in Pfizer stock for each Wyeth share. The acquisition will be financed through a combination of cash, stock and debt ($22.5B) from a bank consortium. It will require shareholder approval by both companies, anti-trust review and the completion of financing by the banks.

Analysts indicate this is intended to prepare for the loss of revenue when Pfizer’s flagship product, Lipitor, patent expires in November, 2011. Lipitor brings in about $13B of Pfizer’s yearly revenue: This is expected to plunge with generic competition.

Separately, Pfizer reported:
1) Slight reduction in year-over-year revenues for 4th quarter.
2) Earnings per share of $.63 for 4th quarter, exceeding analyst consensus estimate of $.60.
3) Cut it’s dividend in half to $.16 per share.
4) Planned reductions of 10% of its about 82,000 workforce.
5) Planned closing of 5 plants.

Analysts expect significant cost reductions and job cuts for the combined company. This is largest US merger since AT&T bought Bell South in 2006. After that merger, AT&T cut 10,000 jobs.