Pfizer Inc, the world’s largest drugmaker by revenue, is in talks to acquire rival Wyeth in a deal that could be valued at more than $60 billion, the Wall Street Journal reported on its website.
The two sides have been in discussions for months and a deal is not imminent, the paper said, citing people familiar with the matter. The talks are fragile given recent market volatility and weak global economic conditions and could collapse, the people told the paper.
Pfizer spokesman Raymond Kerins told Reuters the company does not comment on “market rumors or speculation,” while Wyeth could not be immediately reached for comment. A Wyeth spokesman was quoted in the Journal as saying the company did not comment on “marketplace rumor.”
The Journal said Pfizer would likely use a combination of cash and stock to acquire Wyeth. Details on pricing have not been worked out, it said. The paper said with Wyeth’s market capitalization at about $52 billion and takeover premiums in the sector averaging at more than 20%, the deal would be over $60 billion.
Based on Thursday’s closing share price of $17.21, Pfizer was valued at nearly $118 billion. Pfizer became the world’s largest drugmaker with its purchase in 2000 of Warner-Lambert Corp and the $60 billion acquisition three years later of Pharmacia Corp.
Huge cost savings from the two deals, and outright ownership of cholesterol drug Lipitor from the Warner-Lambert deal, initially made Pfizer one of the best-performing of the world’s large drugmakers.
More recently its performance has flagged and its shares dropped to more than 10-year lows in late 2008, after merger-related savings dried up and its $7 billion-a-year research budget failed to bear much fruit.
Pfizer, which reports Q4 earnings next week, has said it expects full-year 2008 revenue to be roughly similar to its 2007 revenue of $48 billion. But it expects 2008 earnings to show respectable growth thanks to continuing layoffs globally which are expected to help produce $2 billion in cost savings by year-end, compared with the end of 2006.
Pfizer’s biggest challenge is the expected arrival of Lipitor generics in 2011, which would deal a body blow to its $12 billion-a-year flagship product. The company’s Q3 pharmaceutical revenue fell 1% to $11 billion and would have fallen 6% if not for favorable foreign exchange factors.
Sales of Lipitor are already on the wane, slipping 1% in the quarter, due to stiff competition from the likes of AstraZeneca Plc’s Crestor. And Pfizer’s new drug to help smokers quit, a blockbuster hope called Chantix, has lost a fourth of its sales in recent months due to safety concerns. Earlier this month, Pfizer CEO Jeff Kindler told the Financial Times the pharmaceuticals group was open to acquisitions. (Reuters)