Pfizer seals $68bn Wyeth purchase

Pfizer on Monday unveiled a $68bn takeover of Wyeth, reasserting its flagging position as the world’s largest pharmaceuticals group and paving the way for a fresh bout of consolidation across the sector.

The acquisition – to be paid for using equal amounts of cash, equity and debt – creates a group with $71bn in sales from a broad range of products and plans to save $4bn in annual operating costs by cutting 15 per cent of its combined workforce.

Pfizer had been under growing investor pressure to boost its performance as a series of top-selling drugs come off patent, led by the loss of exclusivity in 2011 of Lipitor, the cholesterol-lowering medicine that contributes a quarter of current annual sales.

In a sign of its difficulties, the company reported a 4 per cent fall in fourth-quarter sales to $12.4bn and a 90 per cent drop in net income to $266m after a $2.3bn settlement with the US ­district attorney of Massachusetts probing its marketing ­practices for painkiller Bextra.

The scale of the new group and the restructuring it will trigger are likely to spark other pharma­ceuticals mergers and acquisitions that have been held back while waiting for Pfizer.

Bankers said that the transaction would also boost confidence by demonstrating that cash-rich companies could still find opportunities amid the market turmoil.

“This is the first time in months that we have seen an old-fashioned M&A deal, complete with financing and it has cheered the market,” one banker said.

The deal is the eighth-largest M&A involving a US target, according to Thomson Reuters, which estimated that the seven advising banks could earn as much as $150m in fees.

It is also the third largest globally in the sector after Pfizer’s $89bn acquisition of Warner Lambert in 1999 and the $79bn GlaxoSmithKline merger in 2000.

Jeffrey Kindler, Pfizer’s chief executive, said: “The combination of Pfizer and Wyeth provides a powerful opportunity to transform our industry ... This is a very positive sign for the American economy and American business, and shows that the banks are doing what they are supposed to be doing.”

Sanofi-Aventis, of France, which appointed a new chief executive, is among rivals likely to launch takeovers, while long-cited targets include Biogen Idec, Bristol-Myers Squibb and Amgen.