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Pfizer may nix conditions
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November 10, 1999: 3:57 p.m. ET
Drug firm may ease terms in its $75B bid for control of Warner-Lambert
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NEW YORK (CNNfn) - Pfizer Inc. is examining plans to drop a pair of conditions that have left a cloud over its unsolicited $75 billion bid to steal fellow drug maker Warner-Lambert Co. out of its planned merger with American Home Products Corp.
An industry executive also confirmed a report in the Wall Street Journal that Pfizer (PFE) is open to a deal for Searle, the pharmaceutical division of Monsanto (MTC). The Journal reported Tuesday Monsanto is in talks with potential buyers about a full or partial sale. Pfizer jointly markets the arthritis drug Celebrex with Searle.
According to the industry executive, Pfizer is considering whether to abandon its requirement that Warner-Lambert jettison a $2 billion break-up fee that would be triggered if Warner-Lambert pulls out of its American Home deal.
And in what could mean a even bigger hit to its bottom line, Pfizer is mulling whether to withdraw its insistence that it can use an accounting method known as "pooling of interests" that would provide certain tax benefits, allowing Pfizer to merge with Warner-Lambert without a big hit to earnings.
Pfizer filed a lawsuit in Delaware last week to prevent those two provisions from taking effect.
The openness toward such possible deals, analysts said, suggests that Pfizer is trying to capitalize on its successful alliances with Warner-Lambert and Monsanto.
Pfizer is poised to earn about one-fourth of its earnings next year through its marketing alliance on Warner-Lambert's anti-cholesterol drug Lipitor, which has spurred Pfizer's bid to break up Warner-Lambert's planned merger with American Home.
Pfizer said Wednesday it hired Lazard Freres & Co. and Merrill Lynch & Co. as financial advisers in its attempt to buy Warner-Lambert. It also said it retained Dennis Block, a lawyer with Cadwalader, Wickersham, & Taft, as its legal counsel.
The industry executive also confirmed a Journal report that Pfizer, which is considering at least two strategies in its bid, is more likely to offer its own stock to Warner-Lambert shareholders as a way to win the company, rather than initiating a proxy battle to oust Warner-Lambert's board.
Wall Street was uncertain about how to read Pfizer's conditional bid. Still, many analysts and arbitrageurs expected that if Pfizer was serious in its takeover bid, it would pay the price to surmount those obstacles.
"What Pfizer's saying is that it's very important to merge with Warner-Lambert," said Leonard Yaffe, analyst at Banc of America Securities.
Pfizer has moved up a scheduled meeting with analysts by a week to next Tuesday to outline its takeover plans, Yaffe added.
In late afternoon trading Wednesday, shares of Pfizer fell 3/16 to 34-13/16, while Monsanto jumped 2-1/16 to 46-7/16, Warner-Lambert (WLA) added 2-7/8 to 92-15/16 and American Home Products (AHP) climbed 1-1/2 to 54-3/8.
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