Pfizer, the world's largest drug
maker by revenue, adminis
tered the depressed M&A market some potent medicine as
2009 dawned. It acquired Madison-based rival Wyeth, the ninth largest
pharma company, for $68 bn. It is the first mega acquisition announced on Wall
Street since the outbreak of the subprime contagion and the largest one in the
pharmaceutical industry since Pfizer bought Warner-Lambert for $93.4 bn in
2000. Although credit has notoriously become a rare phenomenon of late, Bank
of America Merrill Lynch, Barclays, Citigroup, Goldman Sachs, and JP
Morgan Chase have come forward to lend Pfizer. The acquisition will be
financed through a combination of cash, debt and stock. Pfizer will pay for the
acquisition with $22.5 bn in cash, $23 bn in
stock, and $22.5 bn in debt. The deal is expected to be completed by the end
of 2009 and generate an estimated $207 mn in fees for the
advisors.
Just three years back, Pfizer sold its own consumer healthcare business
segment to Johnson & Johnson in order to fully concentrate on prescription
pharmaceuticals. However, it appears that Pfizer has taken a U-turn to take
advantage of diversification that the acquisition of Wyeth offers. The
acquisition will transform Pfizer from basically a pure pharmaceutical
company into a broadly diversified healthcare giant, given Wyeth's huge presence
in biotech drugs, vaccines, animal healthcare and consumer healthcare
divisions. Pfizer will inherit Wyeth's blockbuster pneumococcal
vaccine Prevnar and consumer health products. Jeffrey Kindler, Chairman and
CEO, Pfizer is very optimistic about the deal: "The combination of Pfizer and
Wyeth will produce the world's premier bio-pharma company whose distinct
blend of diversification, flexibility and scale positions it for success in a dynamic
global healthcare environment. Its geographic presence in most of the
world's developed and developing countries will be unrivaled."
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