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http://money.cnn.com/2009/01/26/news/companies/pfizer_wyeth/?postversion=2009012614


  Cash-and-stock deal will keep Pfizer the No. 1 drugmaker. Company
   announces sharp drop in profit, and will cut tens of thousands of
   jobs.

   By Aaron Smith, CNNMoney.com staff writer
   Last Updated: January 26, 2009: 2:56 PM ET



   NEW YORK (CNNMoney.com) -- Pfizer announced Monday that it has
   signed a deal to acquire the smaller drugmaker Wyeth for $68
   billion, and tens of thousands of job cuts will follow.

   New York-based Pfizer, already the world's leading drugmaker,
   becomes even larger following the cash-and-stock deal with Wyeth,
   based in Madison, N.J.

   The deal values Wyeth shares at $50.19 each, a nearly 15% premium
   to Friday's closing price. Pfizer agreed to pay $33 in cash and
   0.985 share in Pfizer stock for each Wyeth share.

   Pfizer spokesman Ray Kerins said that two waves of job cuts would
   occur in 2009. In the first, Pfizer said it would cut 10% of its
   81,900 staff - about 8,000 jobs.

   Kerins said that Pfizer will launch the second round of job cuts
   once its merger with Wyeth and its 50,000 workers is completed in
   the third or fourth quarter. At that time, Kerins said Pfizer will
   cut 15% of the combined company's 120,000 or so workers - about
   18,000 more job cuts.

   In all, Pfizer is planning about 26,000 new job cuts and will
   close five manufacturing plants.

   "We're going to do everything we can to improve on our revenues
   and maximize our performance," said Pfizer Chief Executive Jeffrey
   Kindler, in a Monday press conference.

   Pfizer recently announced that it was cutting up to 8% of its
   research staff, or up to 800 jobs.

   Pfizer said the deal would be financed through a combination of
   cash, debt and stock. The company said it is borrowing $22.5
   billion from a consortium of banks.

   The board of directors also decided to cut Pfizer's quarterly
   dividend in half to 16 cents a share.

   Pfizer announced that it would ramp up its focus in treatments for
   Alzheimer's disease, inflammation, cancer, pain and psychosis, and
   continue to focus on vaccines and biotechnology.

   "We want to become a leader in biotherapeutics and vaccines," said
   Kindler. "There is no other company that is such a perfect fit for
   those strategies."

   Pfizer also reported a 90% plunge in quarterly net profit. The
   company said its diluted earnings per share plummeted to 4 cents
   in the fourth quarter, from 40 cents the prior year.

   The company blamed a $2.3 billion charge to resolve allegations
   from federal prosecutors that it had promoted Bextra for uses not
   approved by the FDA. Bextra, an anti-arthritis drug, was pulled
   off the market after Merck's (MRK, Fortune 500) Vioxx was
   withdrawn in 2005.

   Pfizer also reported a slight decline in fourth-quarter revenue to
   more than $12.3 billion, from nearly $12.9 billion the year
   before.

   This is the first big merger since 2006, when the telecom giant
   AT&T (ATT) merged with BellSouth for $67 billion. After that deal,
   AT&T cut 10,000 jobs.

   Miller Tabak analyst Les Funtleyder, author of "Healthcare
   Investing," said that Wyeth has a "decent pipeline" but with
   "nothing that immediately jumps out at me as blockbuster." Most
   promising, he said, is Wyeth's plan to roll out a new form of
   Prevnar, which combats meningitis and blood infections, with sales
   totaling $2.1 billion in 2008.

   Daniel Ruppar, pharma and biotech analyst for Frost & Sullivan,
   said that Pfizer "needed to do some major purchase to expand their
   portfolio, because they have been doing a lot of cuts and trying
   to realign themselves. They may use this opportunity to take the
   best that they have, as well as try to pick the best from within
   the science structure at Wyeth."

   Pfizer's (PFE, Fortune 500) stock price fell 10% in midday
   trading, while Wyeth's (WYE, Fortune 500) was little changed.

   One of Pfizer's chief challenges is finding a replacement for the
   cholesterol-cutting Lipitor, the top-selling drug of all time. The
   drug's annual sales peaked at nearly $13 billion in 2006, but
   revenue will plummet when Lipitor's patent expires in 2011.



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