Calendar of Information Arrival on the Proposed Merger Involving
American Home Products (AHP), Warner Lambert (WLA) and Pfizer (PFE)
The following is an approximate calendar of information contained in Wall Street Journal and
other articles relating to the merger talks between American Home Products and Warner
Lambert, with additional proposals made by Pfizer. The talks took place in 1999.
On November 3, officials of American Home Products and Warner-Lambert, America’s two
largest drug companies, confirmed that they had been engaged in “exploratory” talks of a
possible merger.
On November 4, the companies held a press conference to outline the deal more fully.
following details were stated or surmised from those close to the deal:
The
•
The board of the combined Warner-Lambert - American Home would be split evenly
between the two sides. American Home's chairman, John Stafford, would be chairman
of the combined firm and Warner-Lambert's chairman, Lodewijk J.R. de Vink, would be
chief executive.
•
American Home and Warner Lambert shareholders each will receive about 50% of the
stock of the combined company. 1.49 AHP shares would be used to acquire each share of
Warner Lambert. The total amount offered for WLA’s stock would be about $72 billion,
based on the closing price of AHPs stock on November 3.
•
Warner-Lambert will take on the potential liability over the diet drugs Redux and
Pondimin. American Home reached a settlement over the drugs last month and plans to
take a $4.75 billion charge for the lawsuits.
•
Warner-Lambert may engage in discussions with alternate suitors as long as the company
doesn't initiate the talks. But breaking up the merger would trigger a termination fee of
$1.8 billion.
•
The companies issued cross-options that allow American Home to buy 128 million
Warner Lambert shares for $83.81 per share and allow Warner Lambert to buy 194.6
million American Home shares at $56 per share.
Also on November 4, Pfizer announced a surprise offer for Warner-Lambert. The details for
this deal are as follows:
•
Warner-Lambert shareholders would receive 2.5 Pfizer common shares for each
outstanding Warner-Lambert share. Based on the closing price of Pfizer shares on
November 3, this represents a total value of approximately $82.8 billion.
•
Pfizer said the definitive merger between American Home Products Corp. (AHP) and
Warner-Lambert announced Thursday terminates a prior standstill provision between
1
Pfizer and Warner-Lambert that it claims Warner-Lambert had used to prevent Pfizer
from making an offer to acquire the company. The standstill agreement prohibited
Pfizer from trying to acquire Warner-Lambert while the two firms’ agreement to
co-market the drug, Lipitor, is in effect.
•
Pfizer’s offer is conditioned upon elimination of the $1.8 billion break-up fee and stock
options which are part of the Warner-Lamber and American Home Products agreement.
2
•
The combination would create a company with revenue of $28 billion, and a market capitalization of over $200 billion. The
combined company would have research and development expenditures of about $4 billion, and "little significant overlap or
redundancy."
•
Pfizer expects cost savings and efficiencies of more than $1.2 billion from the merger, which would add immediately to
earnings, before one-time restructuring charges.
•
Pfizer said its offer includes combining both companies' boards.
Pfizer also filed a lawsuit on November 4 in a Delaware court to enjoin the break-up fee and lock-up option granted by
Warner-Lambert Co. (WLA) to American Home Products Corp. (AHP) on their pending merger.
A major reason for the concern over the fee and the option is that these provisions make it difficult for Pfizer to use “pooling of
interest” accounting in the merger. Using purchase accounting would create a goodwill account of approximately $80 billion.
Amortizing that account over 40 years and taking into account the exercise of American Home’s options on Warner-Lambert’s shares
could cause earnings dilution of 30% in 2000.
On November 5, Pfizer hired a proxy solicitation firm to ready itself for a proxy fight, and Warner and AHP also signed on so-called
proxy solicitation firms. Such firms would engage in battle should Pfizer choose to pursue a consent solicitation to replace Warner's
board of directors, which is not subject to staggered elections.
Warner Lambert and American Home Products are planned to raise the stakes in this battle to include Warner's key drug Lipitor.
Warner began actively reviewing the confidentiality agreement that Warner and Pfizer signed on March 4, 1996, with respect to their
joint development of Lipitor. Warner is examining whether it can terminate Pfizer's right to distribute the drug given that the standstill
provision between the two companies also contained in that agreement is no longer in force. Lipitor is expected to have sales of nearly
$4 billion this year.
On November 19, American Home Products Corp. (AHP) and Warner-Lambert Co. (WLA) said they expect $1.2 billion in cost
savings in 2002 from their prospective merger. The savings would help drive net income growth of 20% annually. By 2002, the
combined AmericanWarner's net income would rise to $6.8 billion, or $2.55 a share, from an estimated $3.9 billion, or $1.48 a share, in
1999, the companies said. Revenue would rise to $36.1 billion in 2002 from $26.3 billion in 1999, they said. American Home said it
has 50 projects in the development pipeline, compared with 27 for Pfizer.
On November 23, Legal experts say Warner-Lambert Co. would be pursuing a risky strategy that could easily backfire should it
decide Tuesday to sue Pfizer Inc. to scrap a lucrative joint marketing pact.
Warner-Lambert, which has agreed to merge with American Home Products Corp., is trying to defend itself from Pfizer's hostile bid,
3
now valued at $74.6 billion. At stake is control of the cholesterol-lowering drug Lipitor, which will have sales of nearly $4 billion this
year and is well on its way to becoming the top-selling drug in the world.
While Warner-Lambert's board is scheduled to take up the issue of possible litigation over Lipitor at a regularly scheduled meeting
Tuesday, the actual filing of a lawsuit could take another day, people familiar with the situation said.
In the meantime, Pfizer filed a new complaint against Warner-Lambert and American Home Products. The action alleges
Warner-Lambert breached its contractual obligations to Pfizer in a standstill agreement between the two companies. The complaint also
alleges American Home wrongfully interfered with Pfizer's contractual relationship with Warner-Lambert by inducing the breach.
A Warner-Lambert lawsuit likely would allege that Pfizer breached the Lipitor marketing agreement by violating so-called standstill
agreements in the co-marketing deal, according to people close to the situation. These standstill provisions in general prohibit Pfizer
from making a move for Warner-Lambert as long as the deal is in effect.
Such a lawsuit would represent a bold attempt to hurt Pfizer -- and its share price -- by trying to take back control of the drug. But some
attorneys and analysts said Warner-Lambert could jeopardize Lipitor's future growth prospects by challenging the until-now hugely
successful collaboration.
"They are playing with fire with the most valuable franchise in the global pharmaceutical industry," said Jeff Chaffkin, a PaineWebber
analyst. "If they lose, they look very bad and they risk their key franchise. It's a very high-risk strategy which personally I'd prefer they
not take."
Warner-Lambert officials argue that Pfizer's overtures to Warner-Lambert -- starting with an Oct. 25 letter from Pfizer Chairman
William Steere to Warner-Lambert Chairman Lodewijk J.R. de Vink breached the pact. "Pfizer's first letter violated the standstill
agreement," said Anthony Wild, president of Warner-Lambert's pharmaceutical unit, in an interview. While no decision has been made,
"you can safely assume a major portion of [Tuesday's] meeting" will be about this issue, Mr. Wild said.
Six attorneys who specialize in corporate law, however, said Warner-Lambert doesn't appear to have a particularly strong legal case.
Their reading of the Lipitor agreement is that Warner-Lambert would relinquish its rights to enforce the standstill agreement if a third
company offered to acquire it, or if Warner-Lambert solicited such an offer.
And the legal experts argued that this is most likely the case. Several months before Pfizer expressed interest in Warner-Lambert, Mr.
de Vink initiated talks with American Home. By Oct. 25, when Mr. Steere sent his first letter, negotiations between Warner-Lambert
and American Home were "in their final stages," Mr. de Vink said in an interview last week.
John Coffee, a professor at Columbia University Law School, said he isn't familiar with the details of the American
Home/Warner-Lambert negotiations but added that "in the normal course, after months of negotiations that are about to culminate,
either there's an offer from one side or a solicitation from the other."
4
Some people close to Pfizer argue that a Warner-Lambert suit would amount to a scorched-earth tactic designed to drive down Pfizer's
stock price. "We did nothing to violate the agreement," said one of these people. "There would not be merit legally or factually to the
claim on the face of it."
On November 24, In a surprise move, Pfizer Inc. sued Warner-Lambert Co. a second time, claiming that Warner-Lambert violated a
major provision of their pact to jointly market the blockbuster cholesterol-lowering drug Lipitor and asking a Delaware state court to
stop the merger of Warner-Lambert and American Home Products Corp. Pfizer's lawsuit, which also names American Home as a
defendant, came as Warner-Lambert's board itself was considering legal action against Pfizer for allegedly violating the Lipitor pact.
Warner-Lambert's board held off, for now, on a decision about whether to sue Pfizer to scuttle the Lipitor agreement. People familiar
with Warner-Lambert's thinking said the company is still seriously considering such a lawsuit but wants to make sure it would be in
shareholders' interests.
Pfizer's lawsuit contends that it was Warner-Lambert that actually breached the standstill agreement. Pfizer argues that the standstill
provision ended when Warner-Lambert solicited a merger proposal from American Home. The Pfizer suit may be aimed at both
moving to protect its rights over the standstill as well as keep the venue in Delaware, where Pfizer's original suit against
Warner-Lambert was filed.
Warner-Lambert said, Pfizer's claims that the standstill agreement came to an end because Warner-Lambert solicited an offer from
American Home are incorrect. The standstill comes to an end, according to Warner-Lambert, only if Warner-Lambert is acquired by a
third company. Warner-Lambert argued that because its deal with American Home is a merger of equals, it isn't being acquired and
therefore the standstill agreement was never breached.
Several independent corporate lawyers pointed out that Pfizer's claim of a contract breach is an aggressive move, to say the least, and
that Pfizer may find winning difficult. Indeed, Pfizer is alleging that Warner-Lambert should have told Pfizer about the merger talks out
of "good faith and fair dealing." It is clear there is nothing to that effect in the standstill, these attorneys said.
These lawyers speculated that Pfizer's real motive was to make sure that any argument over the Lipitor contract be part of a broader,
existing suit in Delaware examining the propriety of Warner-Lambert's merger agreement with American Home.
Warner-Lambert "doesn't have a basic duty to disclose to Pfizer," said John Coffee, a professor at Columbia University Law School.
"This is to pre-empt Warner's suit and put it on your playing field" in Delaware. Harvey Pitt, a lawyer with Fried Frank in New York,
said that Pfizer's reasoning was "difficult and novel." But winning this argument isn't Pfizer's first priority, Mr. Pitt said. "There are
always reasons why one wants to be the plaintiff as opposed to waiting to get sued and being stuck with a forum you didn't choose,"
Mr. Pitt said.
On November 29, Salomon Smith Barney raised its rating on Pfizer Inc. (PFE) and downgraded American Home Products Corp.
5
(AHP), saying Pfizer should prevail over American Home in its bid to acquire Warner-Lambert Co. (WLA). Salomon analyst
Christina Heuer upped Pfizer to buy from neutral and cut American Home to outperform from buy. The Salomon analyst said
conversations with Warner-Lambert institutional investors have indicated that the majority favor the combination with Pfizer.
Warner-Lambert Co. (WLA) also filed a counterclaim against Pfizer Inc. (PFE), stating it is entitled to terminate the companies' Lipitor
agreements. Warner-Lambert is alleging that Pfizer intentionally disregarded its contractual agreements and misstated terms of the
standstill restrictions to which it had agreed in the Lipitor agreements.
Warner-Lambert alleged that Pfizer breeched its agreement when it made its Nov. 4 proposal to acquire Warner-Lambert.
Warner-Lambert said Pfizer, in its claim, asserted that the standstill provisions terminated when Warner-Lambert entered into its
merger agreement with American Home Products Corp. (AHP).
Warner-Lambert said the standstill agreements end only if it is being acquired. Warner-Lambert's counterclaim also asserts that Pfizer
breached the Lipitor agreements by using confidential information when it made and priced its bid to acquire Warner-Lambert. The
restriction on the use of confidential information would not end with a termination of a standstill, Warner-Lambert added.
The company said sales of Lipitor are expected to surpass $3.6 billion in 1999. Warner-Lambert had $10.21 billion in total sales in
1998.
Company Profiles
Stock price data and the most recent financial statements for American Home Products, Warner-Lambert, and Pfizer are provided
below. Additionally, the following excerpts from articles in the Wall Street Journal provide subjective assessments of the status of
each firm.
American Home is about to launch some promising new drugs, including a vaccine for pneumococcal disease in children, but some of
its strongest existing sellers, like Premarin, are
aging. A deal with Warner-Lambert would greatly expand its portfolio of medicines.
American Home attempted last year to complete mergers with SmithKline Beecham and Monsanto Co. but because management issues
could not be worked out, those deals failed. Of all the major U.S. drug makers, American Home is widely viewed as the one company
needing to complete a major merger to compete in the fast-moving sector. While its share price has perked up a bit in recent weeks,
American Home has been concerned about the possibility of a hostile overture by a rival drug company. Consequently, it recently
adopted a "poison pill" shareholder-rights plan.
Pfizer is revered for its golden touch in the research laboratories, but it has suffered a number of setbacks lately and some people are
concerned about its short-term outlook. Its antibiotic Trovan, which was expected to be a blockbuster, has been restricted because of
safety problems. Pfizer's decreasing share of Lipitor sales (the blockbuster cholesterol-lowering drug it co-markets with
Warner-Lambert) could depress Pfizer's earnings per share growth to high-single digits in 2004. Also, Pfizer has what Salomon called
6
an "average" pipeline and major U.S. patent expirations in 2005-07 on three drugs, including Zoloft, Zithromax and Norvasc. A
Pfizer/Warner-Lambert combination could benefit from major events in 2000 that should boost sales of the drugs Lipitor, Celebrex and
Zithromax, according to the Salomon analyst.
As for Warner-Lambert, Wall Street analysts have expressed concerns about whether it has enough potentially profitable new drugs in
its pipeline, though profit growth has been robust because of Lipitor's success.
Incentives to Merge in the Pharmaceutical Industry
Drug companies have been merging for about a decade, and some highly touted deals have collapsed following initial hoopla. But what
makes things different right now is that the world-wide pharmaceutical industry is facing a set of unprecedented challenges.
Despite an explosion of biological discoveries that are expected to unleash a flood of innovative
new medicines in the next five to 10 years, pharmaceutical firms are entering an era when patents that protect hot-selling products are
expiring; the pickings are slim inside their research pipelines; and the corporate chiefs atop the largest firms are aging and eager to
make one last splash before they retire.
To weather the bumpy road ahead and keep investors happy with consistently high profit growth, drug makers must produce a steady
flow of truly innovative medicines to command premium prices and quickly generate mammoth sales results. But because the process
of discovering and marketing breakthrough medicines is so expensive and serendipitous, product-hungry drug makers feel pressured to
solve their short-term revenue needs by joining forces.
The result is that the prevailing mantra among the biggest, strongest players is that drug development and world-wide marketing has
become so expensive that only the Goliaths can
succeed. The future may well bring a global drug industry with, say, a half dozen giants.
"In this industry, bigger is better - especially when you look at the price of bringing new drugs to
the market," says Bob Kirby, an analyst for Edward Jones in St. Louis. "Plus, the cost of marketing a drug in the U.S. and abroad is
fairly daunting."
In recent years, mergers occurred among the industry's weaker players that were being crippled
by plummeting revenues as big-selling drugs lost their patent protection, or as small R&D programs failed to produce enough new
drugs to sustain growth. By merging, these companies including Burroughs Wellcome, Marion Merrell Dow, and Sandoz - often generated strong short-term profit gains for their
newly-combined companies through a BandAid financial strategy of jettisoning employees and shutting down redundant
administrative, sales and manufacturing operations.
Many companies are now seeking a revenue-producing bridge to get them through the next few years when they expect that new
7
genetic science will yield a trove of important medicines against heart disease, cancer, diabetes, and infectious diseases. Merck, for
one, is in a particularly difficult place right now, with four major medicines due to lose patent protection in the next two years,
including its heart drug Vasotec and Pepcid for ulcers. Raymond Gilmartin, Merck's chairman, says he's confident the company will
come through those patent expirations just fine. But other industry officials, including other CEOs, express doubt.
"We're entering a new era after a very benign five-year run," said analyst Steven Gerber of CIBC World Markets. "We're seeing
moderating growth rates, diminished new-product prospects and a big surge in drug patent expirations along with a challenging
political environment. So, these companies will be looking at economic efficiencies and will be less reliant on price increases and
new-product launches to drive earnings. The easiest way to do that is in deals like this."
Despite compelling forces driving such deals, several highly visible mergers fell apart in the past
two years. American Home twice failed to consummate deals, one with SmithKline and another with Monsanto Co., largely because of
clashes between top management. Indeed, the drug industry is run by men with strong egos and their own distinctive visions of how
best to exploit the scientific potential being produced by their research labs. But several longtime drug-company leaders - including
American Home's 62-year-old John Stafford - are approaching retirement, and mergers now appear to be driven in part by a search for
an acceptable successor.
Still, some of the mergers expected in the near future may simply result from drug companies trying to keep pace with their growing
competitors or as a defense against some unwanted takeover overture. Even the biggest drug makers control only 4% to 6% of the
world's pharmaceutical business. That fragmentation, and all of its inefficiencies, suggests to some
industry leaders that more consolidation is simply inevitable.
"If you believe that the industry will consolidate further, and I believe there's a lot of consolidation to come, then American Home was
a takeover candidate," said Barbara Ryan,
an analyst for Deutsche Banc Alex. Brown. "So they are taking control of their own destiny
rather than having someone else do it for you. Nobody does these kind of deals offensively.
They're all defensive."
8
Company (Exchange:Symbol) As of:
Close
52 Week Range
5 Year Range Shares Outst
Market Value
11/26/99
AMERICAN
HOME
PRODUCTS
53
38.50 - 70.25
13.84 - 70.25 1305.721 M
(NYSE:AHP)
Engaged in the discovery, development, manufacture, distribution and sales of a diversified line of pharmaceuticals, consumer health care and agicultural products.
5 Giralda Farms
Valuation
Volatility
Madison, NJ 07940
Trailing P/E NE
Liquidity 63.707 M
PH: (973) 660-5000
Forward P/E 30.1
FX:
Price/Sales 5.2
CEO: John R. Stafford
Price/Book 12.3
Group:
Sponsorship
Dividend Yield(%) 1.7
510 Drug Manufacturers/Major
Forward PEG
36 month Beta 0.73
Number of Institutions 2193
Percent Held by 68.10%
Institutions
NC
Balance Sheet Items as of: September 30, 1999
ASSETS($Mill)
LIABILITIES & OWNER'S EQUITY($Mil)
Current Assets
9596.7
Current Liabilities
7549.2
Cash & Equivalents
2146.3
Short Term Debt
1951.2
Property,Plant and Equipment
4373.6
Long Term Debt
3621.7
Intangibles
7805.8
Other Liabilities
6947.4
Other Assets
1967.4
StockHolder's Equity
5625.3
Total Assets
23743.5
Total Liabilities and Equities
23743.6
Five Year Selected Financials History: Fiscal Year Ends on December
(in millions)
12mos (3)
1998
1997
1996
1995
1994
1993
13313.2
13462.7
14196
14088.3
13376.1
8966.2
8304.9
Revenue Pct Chg(vs. Year Before)
NA
-5
1
5
49
8
NA
Depreciation
664
664.7
702
658.1
679.2
306.2
241.1
Revenues
Earns Bef. Inc. Tax
3063.1
3266.3
3244.1
2976.6
2512.5
2177.8
1995.7
-1470.7
2474.3
2043.1
1883.4
1680.4
1528.3
1469.3
-1.15
1.85
1.56
1.46
1.35
1.24
1.18
NA
19
7
8
9
5
NA
0.92
0.66
1.08
0.79
0.76
0.74
0.72
Current Assets
9596.7
7955.6
7361.3
7470.4
7986.1
7821.2
4807.7
Current Liabilities
7549.2
4210.7
4327
4337.6
4556.2
4618.1
1584.4
Long-Term Debt
3621.7
3859.2
5031.9
6020.6
7808.8
9973.2
859.3
1305.721
1312.399
1300.754
1279.966
Net Income
E.P.S.
E.P.S. Pct Chg(vs. Year Before)
Dividends/Shr
Shares Outstanding(millions)
9
1254.8 1223.924 1241.304
Common Equity
5625.2
9614.7
8175.3
6962
5543
4254
3876.4
Profit Margin
-11
18.4
14.4
13.4
Return on Equity
NE
25.7
25
27.1
12.6
17
17.7
30.3
35.9
37.9
Return on Assets
-6.2
11.7
9.8
9.1
7.9
7.1
19.1
P/E Ratio
NE
30.5
24.5
20.1
18
12.7
13.7
Price-Sales Ratio
5.2
5.5
3.51
2.66
2.27
2.14
2.42
Price-Book Ratio
Debt/Equity Ratio
12.3
7.69
6.08
5.39
5.49
4.51
5.19
0.64
0.4
0.62
0.86
1.41
2.34
0.22
Book Value/Shr
4.31
7.33
6.29
5.44
4.42
3.48
3.12
Div Payout Ratio
NE
35.68
69.23
54.11
56.3
59.68
61.02
-9.8
18.3
8.6
7.4
5.7
18.6
43.2
Interest Coverage Ratio
Data provided by : Media General Financial Services
NOTICE: Information presented is gathered from sources deemed reliable. Media General Financial Services (MGFS) does not represent, warrant or guarantee this data or any calculations
or analyses thereof as to completeness, accuracy, timeliness or fitness for a particular purpose or use. MGFS shall not have any liability of any kind for any damages even if notified of the
possibility of such damages.
10
Company (Exchange:Symbol) As of:
11/26/99
PFIZER INC (NYSE:PFE)
Close
52 Week Range
5 Year Range Shares Outst
36.25
31.51 - 49.99
4.42 - 49.99 3871.259 M
Market Value
Research-based health care company which discovers, develops, manufactures and sells technology-intensive products in the following business segments: health care, consumer health
care and animal health.
235 E 42nd Street
Valuation
Volatility
New York, NY 10017
Trailing P/E 49
PH: (212) 573-2323
Forward P/E 43.2
FX: (212) 573-7851
Price/Sales 9.02
CEO: William C. Steere, Jr.
Price/Book 15.97
Group:
Liquidity 148.179 M
Dividend Yield(%) 0.9
510 Drug Manufacturers/Major
Forward PEG
36 month Beta 0.99
Sponsorship
Number of Institutions 2357
Percent Held by 55.00%
Institutions
NC
Balance Sheet Items as of: September 30, 1999
ASSETS($Mill)
Current Assets
LIABILITIES & OWNER'S EQUITY($Mil)
11484
Current Liabilities
9092
942
Short Term Debt
5486
5059
Long Term Debt
525
776
Other Liabilities
1836
Other Assets
2920
StockHolder's Equity
8786
Total Assets
20239
Cash & Equivalents
Property,Plant and Equipment
Intangibles
Total Liabilities and Equities
20239
Five Year Selected Financials History: Fiscal Year Ends on December
(in millions)
Revenues
12mos(3)
1998
1997
1996
1995
1994
1993
15564
13544
12504
11306
10021.4
8281.3
7477.7
Revenue Pct Chg(vs. Year Before)
NA
8
11
13
21
11
NA
Depreciation
426
489
502
430
374
292
258.2
Earns Bef. Inc. Tax
4040
3603
3346
3080
2560.2
1972.5
913.3
Net Income
2859
3351
2213
1929
1572.9
1298.4
657.5
E.P.S.
0.74
0.85
0.57
0.5
0.42
0.34
0.17
NA
49
14
19
24
100
NA
0.28
0.25
0.23
0.2
0.17
0.16
0.14
E.P.S. Pct Chg(vs. Year Before)
Dividends/Shr
Current Assets
11484
9931
6820
6468
6152.4
5788.4
4733.2
Current Liabilities
9092
7192
5305
5640
5187.2
4825.9
3443.6
Long-Term Debt
525
527
1123
687
833
604.2
570.5
Shares Outstanding(millions)
3871.259
3885.892
3885.892
3873.88
Common Equity
8786
8810
7933
6954
5506.6
4323.9
3865.5
Profit Margin
18.4
24.7
17.7
17.1
15.7
15.7
8.8
11
3827.429 3774.492 3854.925
Return on Equity
32.5
38
27.9
27.7
28.6
30
17
Return on Assets
14.1
18.3
14.4
13.2
12.4
11.7
7
P/E Ratio
49
85
43.6
27.6
25.6
18.9
33.8
Price-Sales Ratio
9.02
11.93
7.71
4.73
4
2.94
2.96
Price-Book Ratio
15.97
18.34
12.17
7.68
7.28
5.59
5.74
Debt/Equity Ratio
0.06
0.06
0.14
0.1
0.15
0.14
0.15
Book Value/Shr
2.27
2.27
2.04
1.8
1.44
1.15
1
Div Payout Ratio
37.84
29.41
40.35
40
40.48
47.06
82.35
NC
NC
NC
NC
NC
NC
9
Interest Coverage Ratio
Data provided by : Media General Financial Services
12
Company (Exchange:Symbol) As
Close
52 Week Range
5 Year Range Shares Outst
Market Value
of: 11/26/99
WARNER
LAMBERT
CO
89
60.81 - 93.94
9.99 - 93.94 855.804 M
(NYSE:WLA)
Develops, markets and manufactures health care and consumer products. Products include ethical pharmaceuticals and hard-gelatin capsules; over-the-counter health
care products, shaving products and pet care products; and chewing gums and cough tablets.
201 Tabor Road
Valuation
Volatility
Morris Plains, NJ 07950
Trailing P/E 48.6
PH: (973) 540-2000
Forward P/E 46.1
FX: (973) 540-3761
Price/Sales 6.3
CEO: Melvin R. Goodes
Price/Book 16.68
Group:
Dividend Yield(%) 0.9
510 Drug Manufacturers/Major
Forward PEG
Liquidity 119.425 M
36 month Beta 0.93
Sponsorship
Number of Institutions 1909
Percent Held by Institutions 70.00%
1.5
Balance Sheet Items as of: September 30, 1999
ASSETS($Mill)
LIABILITIES & OWNER'S EQUITY($Mil)
Current Assets
5049.4
Current Liabilities
3377.9
Cash & Equivalents
1012.9
Short Term Debt
233.1
Property,Plant and Equipment
3149.5
Long Term Debt
1280.8
Intangibles
1627.6
Other Liabilities
1297.2
Other Assets
711.1
StockHolder's Equity
4581.7
Total Assets
10537.6
Total Liabilities and Equities
10537.6
Five Year Selected Financials History: Fiscal Year Ends on December
(in millions)
Revenues
Revenue Pct
Before)
Depreciation
Chg(vs.
Year
12mos(3)
1998
1997
1996
1995
1994
1993
12126.2
10213.7
8179.8
7231.4
7039.8
6416.8
5793.7
NA
25
13
3
10
11
NA
339
296.3
275.5
230.8
201.9
181.4
170.4
Earns Bef. Inc. Tax
2337.3
1919.1
1423.7
1213.9
1067.2
1011.1
814.6
Net Income
1586.1
1254
869.5
786.5
739.5
694
285
1.83
1.48
1.04
0.95
0.9
0.86
0.35
NA
42
9
6
5
146
NA
E.P.S.
E.P.S. Pct Chg(vs. Year Before)
Dividends/Shr
0.76
0.64
0.51
0.46
0.43
0.41
0.38
Current Assets
5049.4
4102.3
3297
2784.8
2778
2515.3
2218.7
Current Liabilities
3377.9
3230
2588.9
2136.9
2425.2
2353.4
2015.9
634.5
535.2
546.2
Long-Term Debt
Shares Outstanding(millions)
Common Equity
Profit Margin
1280.8
1260.3
1831.2
1720.5
858.661
821.552
817.489
814.426
4581.7
3612.1
2835.5
2581
2246.1
1816.4
1389.6
13.1
12.3
10.6
10.9
10.5
10.8
4.9
13
814.408 808.384 805.646
Return on Equity
34.6
34.7
30.7
30.5
32.9
38.2
20.5
Return on Assets
15.1
13.6
10.8
10.9
12.1
12.5
5.9
P/E Ratio
48.6
50.8
39.8
26.3
18
14.9
32.1
Price-Sales Ratio
6.3
6.05
4.13
2.81
1.87
1.61
1.56
Price-Book Ratio
16.68
17.09
11.92
7.88
5.86
5.7
6.53
Debt/Equity Ratio
0.28
0.35
0.65
0.67
0.28
0.29
0.39
Book Value/Shr
5.34
4.4
3.47
3.17
2.76
2.25
1.72
Div Payout Ratio
41.53
43.24
49.04
48.42
47.78
47.67
108.57
NC
NC
NC
NC
NC
NC
NC
Interest Coverage Ratio
Data provided by : Media General Financial Services
14
Simplified Statement of Compensation and Holdings of Stocks and Options of CEOs for Potential Merger Partners
Company
Chairman
1998 Salary & Bonus Stocks Held Options Held
Exercise Price
Expiration Date
American Home Products John R. Stafford
$
620,784
1,812,132
$
12/31/05
2,774,000
25.93
789,028
$
12/31/05
47.06
Pfizer
Mr. Steere
$
1,795,776
2,132,400
$
12/31/05
1,379,700
8.96
2,700,000
$
12/31/05
20.58
Warner-Lambert
Lodewijk J.R. de Vink $
1,934,654
1,564,062
$
12/31/05
1,879,333
14.48
932,955
$
12/31/05
26.77
15
Cumulative Abnormal Returns for American Home Products, Pfizer, and Warner-Lambert
30.00%
Warner Lambert
25.00%
November 3, 1999
Cumulative Abnormal Returns (%)
20.00%
15.00%
10.00%
5.00%
0.00%
9/27/99
American Home Products
10/7/99
10/17/99
10/27/99
11/6/99
11/16/99
11/26/99
-5.00%
-10.00%
-15.00%
-20.00%
Pfizer
-25.00%
Date
16
12/6/99
Closing Stock Prices
Date
10/1/99
10/4/99
10/5/99
10/6/99
10/7/99
10/8/99
10/11/99
10/12/99
10/13/99
10/14/99
10/15/99
10/18/99
10/19/99
10/20/99
10/21/99
10/22/99
10/25/99
10/26/99
10/27/99
10/28/99
10/29/99
11/1/99
11/2/99
11/3/99
11/4/99
11/5/99
11/8/99
11/9/99
11/10/99
11/11/99
11/12/99
11/15/99
11/16/99
11/17/99
11/18/99
11/19/99
11/22/99
11/23/99
11/24/99
11/26/99
11/29/99
AHP
Pfizer
WLA
44.0000
37.3125
68.5000
43.2500
43.2500
45.1250
48.6875
50.5000
49.6250
48.3750
48.0000
46.5625
44.9375
46.1875
48.5000
49.3750
49.9375
50.0000
49.2500
48.8750
50.7500
51.8750
52.2500
50.8125
50.3750
56.0000
55.0000
55.0000
54.2500
52.8750
54.8750
55.5000
55.9375
55.8750
55.0000
52.4375
52.5000
54.0000
53.7500
52.3750
54.2500
53.0000
52.5000
37.6250
37.5000
39.0000
38.6250
39.5000
39.8125
39.3750
38.0000
37.6875
36.8750
37.0000
39.9375
41.5000
41.7500
41.6250
40.0000
37.0000
38.5000
39.7500
39.6875
38.5000
38.1250
38.5625
37.2500
34.7500
35.3750
35.0000
35.0000
35.3750
35.1250
35.0000
33.8750
33.8125
33.8125
33.7500
35.1250
35.6875
36.3750
36.0000
37.4375
69.0000
69.0000
69.8125
69.9375
73.5000
72.8125
73.5000
73.0625
69.5625
67.8750
70.5625
74.4375
76.1875
76.5000
77.1875
77.0000
75.7500
75.8125
77.0000
79.8125
80.0000
78.4375
83.8125
90.5000
89.9375
87.8750
90.0625
92.0625
93.2500
93.6250
92.7500
90.8750
88.6875
88.4375
87.6250
89.3125
88.3750
88.6250
89.0000
91.3750
Volume
Returns
S&P 500
AHP
Pfizer
WLA
AHP
1282.8100
4,361,100
8,817,400
3,516,800
1304.6000
1301.3500
1325.4000
1317.6400
1336.0200
1335.2100
1313.0400
1285.5500
1283.4200
1247.4100
1254.1300
1261.3200
1289.4300
1283.6100
1301.6500
1293.6300
1281.9100
1296.7100
1342.4400
1362.9300
1354.1200
1347.7400
1354.9300
1362.6400
1370.2300
1377.0100
1365.2800
1373.4600
1381.4600
1396.0600
1394.3900
1420.0300
1410.7100
1424.9400
1422.0000
1420.9400
1404.6400
1417.0800
1416.6200
1407.8300
17
2,492,800
2,973,100
2,586,200
8,173,600
6,787,400
2,688,600
2,140,000
1,964,900
2,994,600
4,015,700
3,313,500
5,364,900
5,362,100
4,747,800
2,627,400
1,677,300
2,335,200
1,778,000
2,530,000
2,056,900
2,489,600
2,634,200
10,790,700
13,426,500
7,432,400
2,794,300
3,278,700
4,869,100
2,506,700
2,948,500
2,807,900
2,968,000
2,709,100
1,906,200
2,641,500
1,959,800
1,796,100
2,701,000
574,900
4,209,100
7,062,500
7,933,000
8,986,200
5,804,300
12,724,400
7,100,300
7,132,000
6,642,800
4,791,300
5,843,200
6,566,600
14,703,900
17,309,200
15,670,300
8,761,900
14,945,500
9,618,200
7,795,300
10,385,600
9,989,300
7,052,700
6,623,800
7,114,400
14,064,500
44,375,100
21,419,400
21,135,700
15,382,800
9,028,900
10,357,400
12,646,700
18,769,000
18,863,000
17,206,700
14,101,800
14,198,100
14,980,300
12,508,800
5,049,200
14,355,200
3,236,900
2,061,500
2,522,200
1,908,000
5,492,800
2,056,200
2,072,200
3,055,200
3,335,100
2,306,500
2,926,100
5,309,200
4,115,100
3,959,400
2,358,600
3,162,200
2,887,800
2,430,900
3,242,900
3,619,600
3,764,900
3,230,100
8,267,200
16,059,000
16,373,600
5,533,300
6,360,900
6,353,600
3,559,100
3,220,700
3,341,200
5,291,700
3,665,200
3,254,600
2,564,500
2,953,100
1,921,900
1,744,700
780,500
2,141,400
Pfizer
-1.70%
0.00%
4.34%
7.89%
3.72%
-1.73%
-2.52%
-0.78%
-2.99%
-3.49%
2.78%
5.01%
1.80%
1.14%
0.13%
-1.50%
-0.76%
3.84%
2.22%
0.72%
-2.75%
-0.86%
11.17%
-1.79%
0.00%
-1.36%
-2.53%
3.78%
1.14%
0.79%
-0.11%
-1.57%
-4.66%
0.12%
2.86%
-0.46%
-2.56%
3.58%
-2.30%
-0.94%
WLA
0.84%
-0.33%
4.00%
-0.96%
2.27%
0.79%
-1.10%
-3.49%
-0.82%
-2.16%
0.34%
7.94%
3.91%
0.60%
-0.30%
-3.90%
-7.50%
4.05%
3.25%
-0.16%
-2.99%
-0.97%
1.15%
-3.40%
-6.71%
1.80%
-1.06%
0.00%
1.07%
-0.71%
-0.36%
-3.21%
-0.18%
0.00%
-0.18%
4.07%
1.60%
1.93%
-1.03%
3.99%
S&P 500
0.73%
0.00%
1.18%
0.18%
5.09%
-0.94%
0.94%
-0.60%
-4.79%
-2.43%
3.96%
5.49%
2.35%
0.41%
0.90%
-0.24%
-1.62%
0.08%
1.57%
3.65%
0.23%
-1.95%
6.85%
7.98%
-0.62%
-2.29%
2.49%
2.22%
1.29%
0.40%
-0.93%
-2.02%
-2.41%
-0.28%
-0.92%
1.93%
-1.05%
0.28%
0.42%
2.67%
1.70%
-0.25%
1.85%
-0.59%
1.39%
-0.06%
-1.66%
-2.09%
-0.17%
-2.81%
0.54%
0.57%
2.23%
-0.45%
1.41%
-0.62%
-0.91%
1.15%
3.53%
1.53%
-0.65%
-0.47%
0.53%
0.57%
0.56%
0.49%
-0.85%
0.60%
0.58%
1.06%
-0.12%
1.84%
-0.66%
1.01%
-0.21%
-0.07%
-1.15%
0.89%
-0.03%
-0.62%