Ending three months of speculation and hostile exchanges, Pfizer andWarner-Lambert have formally announced plans to merge in a deal worth $90 billion, creating the world's second largest pharmaceuticals company (after Glaxo SmithKline) with a market capitalization of over $230 billion. The deal marks the end of an intense battle since a $58.3 billion link-up between Warner-Lambert and American Home Products was announced, sparking the hostile bid from Pfizer (Marketletters passim). AHP now looks set to receive the biggest-ever breakout fee in history, worth $1.8 billion.
Under the terms of the agreement, W-L shareholders will receive 2.75 Pfizer shares for each W-L share, in a transaction valued at $98.31 per W-L share. The combined company will retain Pfizer's name and headquarters in New York, USA, while W-L's facilities in Morris Plains will become the center for the latter's consumer health care division. The transaction is expected to close toward the middle of this year.
The merged firm will have annual revenues of around $28 billion, of which $21 billion will be from ethical pharmaceuticals. Compound annual revenue and earnings growth are expected to be 13% and 25%, respectively, through 2002. The transaction will be accretive in the first full year of operations and will use pooling of interests accounting, said a company statement.
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