The deal values Wyeth’s shares at $50.19, which is 29% more than the company’s share closing price on January 22. Many have cited Pfizer’s revenue dependence on the cholesterol-reducing drug Lipitor and the looming competition it is slated to receive from generic alternatives as reasons for acquiring Wyeth. The deal will allow Pfizer to diversify its portfolio.
Wyeth owns the top-selling Prevnar childhood vaccine and the Enbrel rheumatoid arthritis drug. Pfizer also acquires Wyeth’s Centrum, Caltrate and other dietary supplement businesses and its over-the-counter drug products, which include the Advil painkiller. Nutrition Business Journal estimates Wyeth’s 2007 supplement sales totaled $475 million, up 3% from the previous year.
Pfizer also announced that it will cut 19,000 jobs, or 15% of the company’s workforce, and close five manufacturing facilities. It will also halve its quarterly dividend to 16 cents per share, which came as a surprise to many investors who valued the dividend. Pfizer will borrow $22.5 billion and pay $22.5 billion in cash and $23 billion in Pfizer shares. Wyeth shareholders will own 16% of the combined company, according to the company statements.
Pfizer CEO Jeffrey Kindler will lead the new combined company, which will have a workforce of approximately 130,000 employees. The combined revenues make Pfizer the world’s largest pharmaceutical manufacturer. The next largest company, GlaxoSmithKline, is only about half the size of the new Pfizer in terms of combined revenues, according to a Bloomberg.com report. The deal effectively ends Wyeth’s 83-year history.