Pfizer CEO: Wyeth Takeover Will Be Different

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Together, the two companies will have 17 different prescription drugs on the market this year that each bring in $1 billion a year or more. No one product, however, will account for more than 10% of the combined company's revenue in 2012, Pfizer said. That distribution softens the damage from individual patent expirations.

Staying No. 1

The combined operation, Kindler said, will produce a company "with a distinct blend of diversification, flexibility, and scale." It will also ensure Pfizer's position as the world's largest pharmaceutical company. Still, says Datamonitor analyst Simon King, the deal "will not resolve the company's negative pharma sales outlook." He estimates that prescription drug sales for the combined company exceeded $70 billion in 2008, and will drop to $54 billion in 2013.

Kindler warned that the merger will also result in flat earnings for the next three years. And, to help finance the deal, Pfizer cut its quarterly dividend by half, to 16¢ a share. The deal is expected to close at the end of the third quarter this year. Pfizer is paying $50.19 a share for Wyeth, a premium of about 30% over the price of Wyeth's stock before news of the merger leaked out on Jan 23. Wyeth's stock closed Friday at 43.74 a share, up 4.91, while Pfizer rose 24¢, to 17.45.

Pfizer will pay for the acquisition with $22.5 billion in cash, $23 billion in stock, and $22.5 billion in debt raised from five banks: Bank of America Merrill Lynch (BAC), Barclays (BCS), Citigroup (C), Goldman Sachs (GS), and JPMorgan Chase (JPM).

The merged company will still be named Pfizer, and Wyeth CEO Bernard Poussot, who took over the company one year ago, said only that he would stay on "through the closing." The boards of both companies have approved the merger, but Wyeth's shareholders must still vote on the deal.

There is already one loser from this merger. Just two weeks ago, Dutch vaccine maker Crucell (CRXL) announced that Wyeth was in preliminary discussions to buy it for $1.4 billion. On Monday it announced the deal has been canceled.

Arnst is a senior writer for BusinessWeek based in New York.