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Warner, AHP hit stump
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November 8, 1999: 5:09 p.m. ET
Execs hit the road to tout $70B deal, as Pfizer trumpets its strength
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NEW YORK (CNNfn) - Executives of Warner-Lambert Co. and American Home Products Corp. were expected to meet Wall Street analysts late Monday to defend their planned merger in the face of Pfizer Inc.'s higher, rival bid for Warner-Lambert.
Warner-Lambert Chairman and Chief Executive Lodewijk J.R. de Vink and American Home's John Stafford were scheduled to meet analysts Monday in the New York office of Bear Stearns & Co., which is Warner-Lambert's financial advisor, analysts said.
The meeting kicks off a road show with the investment community to defend the $70 billion merger which, unless it is sweetened, is likely to be trumped by Pfizer's $74 billion bid, analysts said.
Meanwhile, Pfizer said that it has hired the proxy solicitation firms Innisfree M&A Inc. and Morrow & Co. That could be a sign that Pfizer is looking to appeal directly to Warner-Lambert shareholders.
And Pfizer touted its economic health Monday, saying it is comfortable with the raised analysts' forecasts for 83 cents to 85 cents a share for fiscal 1999 and predicting growth of 20 percent next year.
Given Pfizer's strength, pursuing a strategic combination with Warner-Lambert represents an unique opportunity to create the fastest-growing pharmaceutical company in the world," said Pfizer Chairman and CEO William Steere in a statement.
Whether de Vink and Stafford make a convincing pitch could be important to the share prices of each company, by drawing a better picture of whether the deal will survive the Pfizer onslaught.
"From all appearances … the Pfizer deal is better for Warner-Lambert shareholders," Richard Stover, an analyst with Arnold S. Bleichroder, said, adding: "But you know what Yogi Berra said, 'it ain't over till it's over.'"
On Monday, shares of Warner-Lambert (WLA) slipped 2-1-16 to 87-7/8, American Home (AHP) fell 3/4 to 54-1/4 and Pfizer (PFE) added 1/4 to 35.
There are several issues still unresolved for Pfizer, including whether it will be able to lift the $2 billion break-up fee Warner-Lambert and American Home crafted in their deal, and thorny accounting issues.
Pfizer filed suit Thursday to prevent that break-up fee from taking effect, even before AHP and Warner-Lambert had inked their deal.
Several arbitrageurs, who place bets on whether mergers will be completed, said they had opted to wait on the sidelines until such issues get resolved.
A Warner-Lambert spokesman confirmed reports Monday saying that de Vink was aware Pfizer was interested in tighter links with his company, but that de Vink never had the sense that Pfizer would make a concrete offer he could take to his board.
"The exchange [with Pfizer executives] was so vague that there was nothing to consider," said Warner-Lambert spokesman Jason Ford. "There were no definitive moves we were aware of."
The New York Times and the Wall Street Journal both reported Monday that de Vink was surprised by Pfizer's unsolicited offer.
In a letter dated Oct. 25, Pfizer Chairman William Steere, citing rumors that Warner-Lambert was in talks toward a merger with a third party, invited de Vink to explore a merger with Pfizer.
Steere also said he did not want those talks to injure their existing business relationships, which include a marketing alliance for the hot-selling heart drug Lipitor.
But before that letter, de Vink said, there was no indication Pfizer was interested in pursuing a deal, the Times reported: "There was never an expression to do more than expand the marketing agreement."
In an interview last week with CNN's "Moneyline News Hour," Pfizer President and Chief Operating Officer Henry McKinnell admitted as much, saying: "We talked to Warner-Lambert, not so much this summer, but … during October."
But McKinnell said a three-year-old "standstill agreement" between Pfizer and Warner-Lambert regarding their joint marketing of Warner-Lambert's Lipitor prevented Pfizer from a formal bid until another offer was made.
AHP's offer Thursday opened the door to Pfizer's proposal.
If Pfizer wins, AHP would be left standing at the altar for the third time. Two previous merger deals engineered by Stafford involving Monsanto (MTC) and SmithKline Beecham (SBH) fell apart before they could be completed.
The Times said drug industry executives believed Pfizer was in talks with Monsanto about a potential merger. Spokeswomen for Monsanto and Pfizer declined comment on that. 
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