Pfizer Agrees To $68 Billion Takeover Of Wyeth

Pfizer announced Jan. 26 that it has agreed to pay $68 billion in cash and stock for rival drug maker Wyeth.

The companies say the merger will create "the world’s premier biopharmaceutical company" and establish it as a leader in animal health.

New York-based Pfizer is the parent company of Pfizer Animal Health and Wyeth of Madison, N.J., is the parent company of Fort Dodge Animal Health.

“The combination of Pfizer and Wyeth provides a powerful opportunity to transform our industry,” Jeffrey Kindler, chairman and chief executive officer of Pfizer, said in a statement. “It will produce the world’s premier biopharmaceutical company whose distinct blend of diversification, flexibility and scale positions it for success in a dynamic global health care environment.

“The new company will be an industry leader in human, animal and consumer health. With our combined biopharmaceuticals business, it will lead in primary and specialty care as well as in small and large molecules. Its geographic presence in most of the world’s developed and developing countries will be unrivaled.”

Pfizer expects to save about $4 billion annually through the merger. The savings will be phased in over three years after closing, which is anticipated at the end of the third quarter or during the fourth quarter of 2009.

Pfizer’s animal health division Jan. 26 reported worldwide revenue of $783 million for the fourth quarter ended Dec. 31, compared to $785 million a year earlier.

Year to date, the division reported revenue of $2.8 billion, up from $2.6 billion because of a strong performance in global livestock and companion animal products.

Overall, Pfizer reported net income of $266 million on revenue of $12.3 billion in the fourth quarter, compared to net income of $2.7 billion on revenue of $12.9 billion in the year-ago period.

Pfizer also announced a cost-cutting initiative that is expected to achieve incremental savings of about $3 billion. The program will be substantially complete by the end of 2010, with the full savings realized by the end of 2011.

As part of the initiative, the company intends to reduce its workforce by about 10 percent. Pfizer currently has about 81,900 employees. Reductions will span sales, manufacturing, research and development and administrative organizations. The company intends to reduce the number of manufacturing sites to 41 from 46 and reduce its facilities' square footage by about 15 percent.

Fort Dodge Animal Health on Jan. 26 reported revenue of $237 million for the fourth quarter ended Dec. 31, down 6 percent from the year-ago period.

Year to date, the division reported revenue of $1.1 billion, up 4 percent.

Overall, Wyeth reported net income of $960.4 million on revenue of $5.3 billion for the fourth quarter, compared to net income of $1 billion on revenue of $5.8 billion in the year-ago period.

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