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Pfizer to Buy Pharmacia for $60 Billion

July 15, 2002|From Times Staff and Wire Reports

Pfizer Inc. has agreed to buy rival Pharmacia Corp. for $60 billion in stock in a deal that would create the world's largest pharmaceutical company, according to newspaper reports.

The deal is expected to be announced today, the Wall Street Journal and New York Times reported. The combined company, with about $48 billion in revenue, would be the leading pharmaceutical concern in every major market worldwide.

Neither Pfizer nor Pharmacia was available for comment late Sunday.

New York-based Pfizer is already one of the world's biggest drug makers, with products including Viagra, Lipitor and Zoloft. Peapack, N.J.-based Pharmacia's major prescription drug is Celebrex, the blockbuster arthritis medication.

The pharmaceutical industry has been shaken recently on a number of fronts, from stiff competition from generic drug manufacturers and sharp stock price drops to concerns about accounting procedures, lawsuits over high drug prices and increased regulatory pressure.

"The merger certainly bespeaks to a need within the industry to consolidate," said Berkeley-based health care expert Peter Boland late Sunday. "It takes so much now to bring a new drug to development and then to the market that these companies will look to join forces."

Under terms of the deal, Pharmacia would proceed with its previously announced plans to spin off its remaining 84% ownership of Monsanto Co. to its current shareholders. After the spinoff, Pharmacia shareholders would receive 1.4 shares of Pfizer stock for each share of Pharmacia, valuing Pharmacia stock at $45.08 per share, representing a 36% premium over Pharmacia's Friday closing price.

People familiar with the transaction told the Journal they expect minimal antitrust problems because the companies have few overlapping products and because Pfizer's global share of total pharmaceutical sales--currently 8%--would rise only to about 11% if the deal is completed.

Pfizer, whose stock soared in the late 1990s with the success of the anti-impotence drug Viagra, is no stranger to mega-mergers.

In 2000, it completed a $115-billion acquisition of Warner-Lambert, gaining control of the cholesterol-lowering drug Lipitor in the process.

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