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Pfizer buys rival for $60bn
15/07/2002 16:21 - (SA)
New York - In a surprise blockbuster merger that would expand the reach of the world's largest drug company, Pfizer Inc has agreed to buy rival Pharmacia Corp for US$60bn in stock.
The new company would have combined annual revenue of $48bn and a research-and-development budget of more than $7bn.
Under the deal, Pharmacia shareholders would receive 1.4 shares of Pfizer stock for each share in Pharmacia. That represents $45.08 worth of stock based on Friday's closing Pfizer price and is a 36% premium over the Pharmacia's closing price of $32.59 a share on Friday.
The deal was approved by the boards of both companies but still needs approval from regulators and shareholders.
The timing of the deal is surprising considering the overall
health of the economy and the many obstacles facing the drug
sector.
Pharmaceutical companies are experiencing intense competition
from generic drugs, pressure on prices from the federal government and a growing number of patents that are expiring.
Their stock prices have fallen in recent months along with the rest of the market as distrust in corporate America grows almost daily amid several high-profile accounting scandals and bankruptcies.
The deal would create a company that produces many of the common prescription drugs found in medicine cabinets around the world.
Already the world's biggest drug company before the deal,
Pfizer's products include Viagra, Lipitor and Zoloft, while Pharmacia's major drug is the arthritis medication Celebrex.
Pharmacia also makes Rogaine hair products and Nicorette. Pfizer's over-the-counter products include Listerine and Halls. -Sapa-AP
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