Warner-Lambert Nixes Pfizer Offer
By NOELLE KNOX and PHIL GALEWITZ AP Business Writers
NEW YORK (AP) - A few years ago, Warner-Lambert (NYSE:WLA - news) Co. was known mainly for its breath mints, razors and over-the-counter medicines. Now it's the target of one of the fiercest pharmaceutical takeover battles in years.
Both Pfizer Inc. and American Home Products Corp (NYSE:AHP - news). have made multibillion dollar bids for the firm, which is the world's 15th largest prescription drug company.
Pfizer launched a $79.5 billion bid for Warner-Lambert on Thursday, in an attempt to break up a $70.1 billion merger just announced between Warner-Lambert and American Home Products Corp.
But Warner-Lambert's board rejected Pfizer's offer late Thursday, saying its planned merger with American Home Products is in the best long-term interest of shareholders, employees and the communities in which it has operations.
Either merger would have made the combined company the world's No. 1 maker of prescription drugs.
One reason Warner-Lambert's is envied is its blockbuster cholesterol-lowering drug Lipitor, expected to generate $3.3 billion in sales this year.
While Pfizer and Warner-Lambert already have a co-marketing agreement to sell Lipitor, ''Pfizer wants the other half of Lipitor they don't currently have,'' said Steve Gerber, an analyst with CIBC World Markets Corp.
The competing bids illustrate the constant pressure to discover new drugs to replace those whose patents are running out, leaving the drugs open to competition from generic versions. Meanwhile, research costs are high and Wall Street demands consistently stronger profits.
''These companies have drugs coming off patent and they have nothing to replace them with. So what do they do? They buy other companies to diversify their portfolios,'' said David Southwell, chief financial officer of Sepracor Inc (Nasdaq:SEPR - news)., a biotechnology firm.
Pfizer's bid shocked executives at Warner-Lambert, who were in the midst of a live television interview about the American Home Products deal when the rival bid surfaced.
Thursday's free-for-all sent stocks of other drug companies rising in anticipation of a new round of dealmaking, with the value of some shares rising more than 4 percent.
''This industry is going to undergo an unprecedented consolidation over the next 15 months,'' said Len Yaffe, an analyst at Banc of America Securities.
Pfizer, the world's fifth-largest maker of prescription drugs, is best known for its impotence pill Viagra and also sells the blood pressure-control drug Norvasc and the antidepressant Zoloft.
It is one of the industry's fastest-growing companies, as is Warner-Lambert, which makes consumer products like Certs mints, Schick razors and Listerine mouth wash.
American Home Products' top executive, John Stafford, declined to comment on the rival bid.
American Home Products, the eighth-largest prescription drug maker, is based in Madison, N.J. It is behind products including Advil, Robitussin, Centrum vitamins and Chapstick and the top-selling hormone replacement drug Premarin, the world's most prescribed medicine.
In trading Thursday on the New York Stock Exchange, Warner-Lambert shot up 7.5 percent, or by $6.311/4 to $90.121/2 a share, Pfizer fell $1.371/2 to $37.183/4 and American Home Products was down $1 at $55.
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