CBS MarketWatch: $2.1 billion pact Warner-Lambert to buy Agouron
By Stephanie O'Brien, CBS MarketWatch
Last Update: 6:00 PM ET Jan 26, 1999
MORRIS PLAINS, N.J. (CBS.MW) --Warner-Lambert Co. agreed to buy
Agouron Pharmaceuticals in a $2.1 billion deal giving it a developer of drugs
that treat cancer, AIDS and other serious diseases.
Under the pact, announced after the markets closed
Tuesday, each share of Agouron stock will be
exchanged for approximately $60 in
Warner-Lambert (WLA) stock. Shares will
exchanged in a range of 0.8108 to 0.93 shares of
Warner-Lambert common stock for each share of
Agouron (AGPH) common stock. The exchange
ratio will be based on the average price of
Warner-Lambert stock prior to the transaction's
closing, the companies said.
If they fail to complete their merger,
Warner-Lambert has the option to purchase up to
19.9 percent of Agouron's common stock and has
the right to a fee of at least $60 million.
The purchase will allow Warner-Lambert to augment its new product
pipeline and will significantly expand its presence in anti-viral and cancer
treatments. In addition to gaining access to several promising late-stage
compounds, Warner-Lambert gets Viracept, a leading HIV drug,
immediately if the transaction is completed, Warner-Lambert said.
"There's a strategic fit there," said Jay Silverman, an
analyst at BancBoston Robertson Stephens in New
York. While adding the deal was a bit of a surprise,
Silverman pointed out that Warner-Lambert is
developing its own AIDS drug and is building its line
of cancer treatments.
"There's been speculation since last summer that
Agouron was on the block," though DuPont (DD),
Pharmacia & Upjohn (PNU) and Abbott Labs
(ABT) were seen as more likely suitors, the analyst
said.
The transaction will not require Warner-Lambert
shareholder
approval and is not expected to dilute future earnings.
"In taking this action, we believe we have strategically enhanced our
prospects for long-term growth without sacrificing our ability to meet
expectations of superior near-term earnings performance," Melvin R.
Goodes, Warner-Lambert chairman and chief executive officer, said in a
statement.
Shares of Agouron, based in La Jolla, Calif., rose 3 21/32 to 56 13/16 ahead
of the announcement.
Warner-Lambert, based in Morris Plains, N.J., makes products including
Listerine, heartburn remedy Zantac 75 and Trident gum. Its Parke-Davis
and Goedecke pharmaceuticals divisions make pain relievers, anesthetics,
and diabetes and cholesterol treatments. Shares rose 1 5/8 to 69 1/8.
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