Tags:
Journalism of Courage
NEW YORK, Nov 4: American Home Products Corp and Warner-Lambert Co said on Thursday they had agreed to merge in a deal that would form the world’s largest pharmaceutical and consumer health products company.
The companies said they would create a new holding company, to be called American Warner Inc, and shareholders of each company would own about half the new company. If valued as a takeover of the smaller Warner-Lambert, the deal would be worth almost $72 billion.
The combined company would have $26 billion in annual sales, bolstered by a roster of drugs such as cholesterol-fighting Lipitor, female hormone therapy Premarin, epilepsy treatment Neurontin and antidepressant Effexor. Well-known consumer health products to be sold by American Warner include Advil, Listerine, Robitussin, Sudafed, Rolaids and Chapstik.
About 66 per cent of sales would come from pharmaceuticals, 17 per cent from consumer health care products and 17 per cent from non-health care businesses such as agricultural and confectionary products. AHP shareholders would receive one share of American Warner for each of their shares, and Warner-Lambert shareholders would receive 1.4919 new company shares for each of their shares.
Shares of AHP, the number five US drug company in terms of global prescription drug sales, closed up 5-7/16 at 55-13/16 on Wednesday in trading on the New York Stock Exchange. Shares of Warner-Lambert, the number nine US drug maker, rose 5-13/16 to 84, also on the NYSE.
Neither company appeared to be receiving a premium for its shares, and the companies said the market value of American Warner would be about $145 billion, equivalent to the values of the two companies as of Wednesday’s market close.
At Wednesday’s close, AHP had a market value of about $ 72.93 billion and Warner-Lambert had a market value of about $ 71.80 billion. Madison, New Jersey-based AHP and Morris Plains, New Jersey-based Warner-Lambert said they expected the combination to lead to higher earnings growth than either company could achieve on its own, and they said cost savings would total $1.2 billion annually by the third year after closing.
The new company’s board would have 20 members, with half designated by AHP and half by Warner-Lambert John Stafford, chairman, president and chief executive of AHP, would be chairman of the new company for 18 months.
Lodewijk J R de Vink, chairman, president and CEO of Warner-Lambert, would be American Warner’s CEO and would become chairman when Stafford retired from the position. Stafford also would be chairman of the board’s executive committee, and would continue in that position and remain on the board until he is 65, the companies said.
The deal was expected to close in the second quarter of 2000. As a measure of security for the deal, the companies granted each other reciprocal stock options and have agreed to reciprocal fees of up to $2 billion if either company terminates the deal under certain circumstances.
Corporate headquarters for the new company would be located in AHP’s home base of Madison. The pharmaceutical business would be headed from Radnor, Pennsylvania, and the consumer health and nutrition business would be in Morris Plains, where Warner-Lambert is located.
Merck to lose top drugmaker title
NEW YORK: Merck & Co will have to relinquish its title as world’s largest drugmaker once AmericanWarner Inc is created next year from the merger of Warner-Lambert Co and American Home Products Corp.
"American Warner will be No 1 globally in sales of pharmaceutical products," Warner-Lambert spokeswoman Carol Goodrich told Reuters after the deal was announced early on Thursday.
Goodrich said Warner-Lambert and AHP expected combined 1999 pharmaceuticals sales of more than $17 billion, a figure she predicted would slightly exceed those of their New Jersey neighbour Merck. She said Merck drug sales would likewise fall short of American Warner’s in 2000, when the merger was completed.
Merck was not immediately available for comment. For decades it has enjoyed a reputation of developing "first-in-class" medicines – those that develop blockbuster sales as a result of being deemed best by prescribing physicians in different therapeutic areas.
By the late 1970s, Merck introduced arthritis drug Clinoril, the muscle relaxant Flexeril and glaucoma treatment Timoptic. Spurred by former chief executive Roy Vagelos, a biochemist, it launched 10 major drugs in the 1980s, including Vasotec for hypertension and cholesterol-lowering agent Mevacor.
It introduced a crop of eight new drugs in 1995 and 1996, including the popular hypertension drug Cozaar. And in 1998, Merck launched five new drugs developed by its scientists, including Singulair for asthma. Earlier this year, it introduced arthritis and pain drug Vioxx – a pill that some analysts expect to eventually garner annual sales of more than $3 billion.
Top
