The deal comes as /*Pfizer*/'s profit takes a brutal hit from a $2.3 billion legal settlement over allegations it marketed certain products off-label, or for indications they are not yet approved. The New York-based company is also cutting 10 percent of its work force, slashing its dividend, and reducing the number of manufacturing sites.
Early Monday, Pfizer, the maker of /*Lipitor*/ and /*Viagra*/, said it will pay $50.19 per share under for /*Wyeth*/, valuing Madison, N.J.-based Wyeth at a 14.7 percent premium to the company's closing price of $43.74 Friday.
Both companies' boards of directors approved the deal.
Pfizer has been under pressure from Wall Street to make a bold move as it faces what the is referred to as a patent cliff in the coming years. As key drugs lose patent protection they will face generic competition and declining sales. The world's top-selling drug, the cholesterol treatment Lipitor, faces generic competition starting in November 2011. It brings in about $13 billion per year for the company.
Acquiring Wyeth helps Pfizer diversify and become less-dependent on individual drugs, while adding strength in biotech drugs, vaccines and consumer products.
"The combination of Pfizer and Wyeth provides a powerful opportunity to transform our industry," Pfizer Chairman and Chief Executive Jeffery B. Kindler said in a statement. "It will produce the world's premier biopharmaceutical company whose distinct blend of diversification, flexibility, and scale positions it for success in a dynamic global health care environment."
Shortly after announcing the Wyeth deal, Pfizer said fourth-quarter profit plunged on a charge to settle investigations into off-label marketing practices. The company earned $268 million, or 4 cents per share, compared with profit of $2.72 billion, or 40 cents per share, a year prior. Revenue fell 4 percent to $12.35 billion from $12.87 billion.
Excluding about $2.3 billion in legal charges, the company says profit rose to 65 cents per share.
Analysts polled by Thomson Reuters expected profit of 59 cents per share on revenue of $12.54 billion.
Looking ahead, New York-based Pfizer expects earnings per share between $1.85 and $1.95 in 2009, below forecasts for $2.49.
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