The deal between Pfizer Inc. (PFE) and Wyeth was completed yesterday after the receipt of final regulatory approvals. Wyeth will cease to trade as an independent entity from today. Under the terms of the deal, Wyeth shareholders will receive $33 cash (without interest) and 0.985 Pfizer shares for every Wyeth share.
The cash-and-stock deal, which was valued at $68 billion when it was announced nine months ago, stood at about $66.9 billion based on Wednesday’s closing prices. Pfizer borrowed about $22.5 billion to this transaction. Pfizer expects the combined companies to realize synergies of about $4 billion by 2012. The deal is expected to be accretive to earnings by the second full-year following closing. Roughly one-half of the savings are expected to come from Selling General & Administrative costs with the balance coming from Research and Development. Pfizer intends to incrementally pay down the debt financing and looks to be net cash positive by 2012.
Pfizer aims to compensate for the loss in revenues when its $13 billion-a-year cholesterol medicine Lipitor loses exclusivity by adding Wyeth’s lucrative vaccines and animal and consumer products, as well as traditional pills such as the blockbuster antidepressant Effexor.
The combined entity aims to improve its bottom line by shutting offices and factories, resorting to job-cuts and undertaking other cost-cutting measures. Pfizer intends to show the door to approximately 15% of the combined workforce. Revenues for the combined companies came in at $71.1 billion last year. The combined entity aims to generate about $57 billion in revenues and should employ roughly 110,000 workers post job-cuts.
The combined company, with an expanded portfolio, is looking to become the world’s premier biopharmaceutical company and an industry leader in human, consumer and animal healthcare, in both disease prevention and treatment.
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