Pfizer lays a chunky bid on Wyeth

The merger of two pharma giants is the largest industry deal so far this year. Pfizer will acquire Wyeth in a cash-and-stock transaction currently valued at approximately $68 billion. The Boards of Directors of both companies have said yes to the deal that may lead to lay-offs of some 8,000 persons.
When merged the combined Pfizer and Wyeth operations will be one of the most diversified companies in the global health care industry. It will combine a strong product pipeline, leading scientific capabilites and activities in a number of growing therapeutic research areas, reducing the dependence on small molecules. Some of the priority areas pursued by Pfizer over the last two years, includes an enhanced in-line and pipeline patent-protected portfolio in key disease areas, such as Alzheimer’s disease, inflammation, oncology, pain and psychosi. Pfizer have also worked hard to establish itself as a top-tier player in biotherapeutics and vaccine. Together the new company will have a product portfolio that includes 17 products with more than $1 billion each in annual revenue, in therapeutic areas such as cardiovascular, oncology, women’s health, central nervous system, and infectious disease.

The transaction is expected to close at the end of the third quarter or during the fourth quarter of 2009. It will be financed through a combination of cash, debt and stock. A consortium of banks has provided commitments for a total of $22.5 billion in debt. The merger of the two pharma giants will not only lead to synergy advantages in research and development. The transaction will also yield cost savings of approximately $4 billion to be fully realized by the third year after closing. Savings are expected in selling, informational and administrative functions, research and development, and manufacturing. Some sources mention lay-offs amounting to as much as 8,000 employees in the two companies combined. The proposed transaction is subject to approval by the stockholders of Wyeth and antitrust notification and clearance.
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