Monday, January 26, 2009

Pfizer buying Wyeth for $68B

By Mass High Tech staff

In a marriage of drug titans, Pfizer Inc. reports it plans to shell out $68 billion to acquire Wyeth in a cash-and-stock deal that already has the approval of the boards of directors of both companies. Combined, the two companies have more than 10,000 employees in New England, and the companies have already said “cost savings” will result from the deal, though no specifics were disclosed.

New York-based Pfizer (NYSE: PFE) will pay $50.19 per share of New Jersey-based Wyeth (NYSE: WYE) stock, broken out as $33 in cash and 0.985 of a share of Pfizer common stock. The deal will allow Pfizer to create a more diversified global product portfolio and reduce its dependence on small molecule drugs, according to the company.

The deal should be accretive to Pfizer’s adjusted diluted earnings per share two years after it closes, officials said, and is anticipated to yield cost savings of approximately $4 billion by the third year after closing. Pfizer said the savings are expected to be in sales, informational and administrative functions, research and development, and manufacturing, implying job cuts coming after the acquisition.

A group of banks has provided Pfizer with commitments for a total of $22.5 billion in debt to help complete the deal.

Pfizer has more than 7,000 employees in New England, including those at a new research unit launched in November called Pfizer Regenerative Medicine, which operates in both Cambridge, Mass., and Cambridge, England. Pfizer Regenerative Medicine is designed as an independent research unit to study stem cell use in organ repair and degenerative disease treatment. The units will rely on pharmaceutical, biotech and academic partnerships, Pfizer officials said.

Wyeth also has a strong presence in New England, employing more than 2,000, including those at a biopharmaceutical facility in Andover.

Pfizer, founded in 1849, employs more than 84,000 workers in more than 90 countries. Wyeth, founded in 1860, employs more than 45,000 worldwide.