Warner-Lambert to Buy Agouron for $2.1 Billion (Update1)
Bloomberg News
January 26, 1999, 4:46 p.m. ET
Warner-Lambert to Buy Agouron for $2.1 Billion (Update1)
(Adds detail, analyst comment)
La Jolla, California, Jan. 26 (Bloomberg) - Warner-Lambert
Co., one of the world's most profitable drugmakers, said it will
buy Agouron Pharmaceuticals Inc., maker of the best-selling
protease inhibitor for AIDS, for $2.1 billion in stock.
Warner-Lambert said it will pay 0.8108 to 0.93 share of its
stock, or approximately $60, for each share of Agouron stock.
The move will give Warner-Lambert its first AIDS drug --
Agouron's Viracept. That could provide Warner-Lambert with a
hedge against a decline in sales of one of its top selling drugs,
the diabetes pill Rezulin, which faces a federal safety review
and new competition.
''It will significantly strengthen Warner's presence in the
antiviral area,'' said Akhtar Samad, an analyst with Mehta
Partners in New York. ''They get the leading protease inhibitor''
as well as three other AIDS drugs now in clinical trials.
Shares in Agouron were halted before the news was released.
Earlier the the La Jolla, California-based biotechnology company
rose 3 21/32 to 56 13/16. Warner-Lambert rose 1 to 68 1/2. The
acquisition was announced just before the close of U.S. stock
markets.
Rezulin, with 1998 sales of $202.8 million. The drug has
been linked to serious liver damage and more than 30 deaths, and
will soon face competition from drugs which carry fewer risks.
With companies including SmithKline Beecham Plc. and Eli
Lilly & Co. in a joint venture with Japan's Takeda Chemical
Industries Ltd., in the final stages of developing rival drugs,
sales of Rezulin have become something of a ''wild card,''
Hambrecht & Quist analyst Alex Zisson said yesterday.
''Warner Lambert has been looking for new products. They
have a lot of cash, but I don't see the synergies,'' said Charles
Engelberg, an analyst with AmeriCal Securities who has an
''outperform'' rating on Warner Lambert shares.
Viracept boosts the value of the company because Agouron
held onto the rights to market it in the U.S., unlike many
biotechnology companies who rely on big drugmakers to sell their
drugs. That means Warner-Lambert won't have to share future
profits from the AIDS drug.
''By concentrating our resources and expanding into new
therapeutic categories we will be well positioned to continue our
impressive growth in the pharmaceutical sector,'' Warner-Lambert
Chairman and Chief Executive Melvin R. Goodes said in a
statement.
--Jim Finkle in the San Francisco newsroom (415) 912-2996 with
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