Under the terms of the transaction, each outstanding share of Wyeth common stock will be converted into the right to receive $33 in cash and 0.985 of a share of Pfizer common stock, subject to the terms of the merger agreement. Based on the closing price of Pfizer stock as of January 23, 2009, the stock component is valued at $17.19 per share.
The transaction provides immediate value to Wyeth shareholders through the cash component, as well as continued participation in the future prospects expected to result from the combination through their ownership of approximately 16% of Pfizer’s shares.
The deal is expected to be accretive to Pfizer’s adjusted diluted earnings per share in the second full year after closing. The transaction is anticipated to yield cost savings of approximately $4 billion to be fully realized by the third year after closing. Savings are expected in selling, informational and administrative functions, R&D, and manufacturing.
The combined company is expected to create one of the most diversified companies in the global healthcare industry. The combined company will have product offerings in numerous growing therapeutic areas, a strong product pipeline, leading scientific and manufacturing capabilities and a global footprint in healthcare.
With its broad and diversified global product portfolio and reduced dependence on small molecules, the new company will be positioned for improved, consistent, and stable top-line and earnings per share growth and sustainable shareholder value in the short and long term. It is expected that no drug will account for more than 10% of the combined company’s revenue in 2012.