By Jessica Hall
PHILADELPHIA (Reuters) - PFIZER (PFE.NY)Inc
The boards of the U.S. rivals were holding separate meetings on Sunday to finalize an agreement and an announcement was seen as imminent, said three sources with direct knowledge of the talks. One source said Pfizer was still finalizing a $25 billion financing package to fund the deal.
The deal would help Pfizer cope with a major gap in revenue in 2011 when its blockbuster Lipitor cholesterol treatment will begin to face U.S. generic competition. Next year, Wyeth loses patent protection on its own top drug, the antidepressant Effexor XR.
Still, buying Wyeth would help Pfizer diversify into vaccines and injectable biologic medicines by adding Wyeth's big-selling Prevnar vaccine for childhood infections and Enbrel rheumatoid arthritis treatment. Pfizer would realize major cost savings by streamlining areas that overlap.
Pfizer was expected to pay roughly $50.19 per share for Wyeth, sources said. Pfizer would pay $33 per share in cash and 0.985 per share of Pfizer stock for each share of Wyeth. The sources were not authorized to talk to the media.
Based on Wyeth's 1.33 billion shares outstanding as of October 31, the deal would be valued at about $66.8 billion. Including Wyeth's stock options, the deal would be worth $68 billion, sources said.
At $50.19 per share, the deal would mark a 15-percent premium over Wyeth's closing stock price of $43.74 on Friday. Wyeth's stock surged 12.6 percent on Friday on news of the possible deal.
"I think shareholders would be happy with that," said David Moskowitz, pharmaceuticals analyst with Caris & Co. "I think $50 is a good price. I think it's fair for both parties."
A merger of Pfizer and Wyeth could trigger a wave of consolidation in the cash-rich pharmaceutical sector as drug makers look to diversify revenues in the face of competition from generic-drug rivals, analysts said.
"Consolidation is a necessary evil in Big Pharma. This sector must consolidate now and Pfizer is the poster child," Moskowitz said. "The industry cannot sustain the number of players we have in major pharma anymore."
Pfizer Chief Executive Jeff Kindler was expected to head the combined company, sources said. Wyeth Chairman Bernard Poussot was expected to leave after the deal closed, one source said.
Pfizer has struggled after digesting two huge deals in the past decade. Kindler previously has called mega-mergers disruptive and distracting.
GROWTH THROUGH ACQUISITIONS
Pfizer became the world's largest drugmaker with its purchase in 2000 of Warner-Lambert and the $60 billion acquisition three years later of Pharmacia.
Pfizer typifies many large drugmakers, which have struggled to produce new blockbusters to replace those on which they lose exclusivity.
Aside from Enbrel, for which Wyeth shares rights with Amgen Inc
Pfizer would also gain Wyeth's large consumer health division that includes Advil painkillers more than two years after it sold off its own consumer health business to Johnson & Johnson
Wyeth had been in talks to buy Dutch vaccine firm Crucell
Wyeth has been holding talks with both Pfizer and Crucell in recent weeks, and a deal with Pfizer would not necessarily scuttle Wyeth's Crucell deal, sources said. A combined Wyeth-Pfizer could pursue Crucell as a second step to their deal, sources said.
(Additional reporting by Lewis Krauskopf; Editing by Phil Berlowitz and Anshuman Daga)
