Secret Approach by American Home Products to Pharmacia & Upjohn Raises Questions About Warner-Lambert Deal

Strategic Insights -

American Home Products' advisers have made a secret approach to Pharmacia & Upjohn's advisers, suggesting a takeover of P&U if AHP's deal with Warner-Lambert falls through. This move comes after Pfizer launched an unsolicited bid for Warner-Lambert, making AHP's merger attempt its third failed attempt. AHP is still confident in its deal, but the recent decline in its share price has made the value of its bid for Warner-Lambert $13bn lower than Pfizer's offer. Analysts believe a deal with P&U could make sense, given Fred Hassan's experience with AHP and P&U's smaller size.

Key Takeaways:

  • AHP's advisers have made a secret approach to P&U's advisers, suggesting a takeover if the Warner-Lambert deal fails.
  • AHP's deal with Warner-Lambert is its third failed merger attempt, following failed attempts by Pfizer and Monsanto.
  • The recent decline in AHP's share price has made the value of its bid for Warner-Lambert $13bn lower than Pfizer's offer.
  • AHP is still confident in its deal, but is drawing up alternative plans in the event of failure.
  • P&U's smaller size and AHP's confidence in its management team make a deal with P&U a possible option.
  • Analysts believe that Mr. Hassan's experience with AHP could be a key factor in a potential deal.
  • P&U's market value is $27bn, compared to AHP's $61bn.
  • AHP has been advised by Morgan Stanley Dean Witter and Chase Manhattan, while P&U is typically advised by Goldman Sachs.

Statistics:

  • AHP's bid for Warner-Lambert is now worth $72bn, $13bn below Pfizer's offer.
  • AHP's share price was down $0.78 at $46.625, while Pfizer's was up $0.01 at $33.00.
  • P&U's market value is $27bn.
  • P&U is less than half the size of AHP.
  • AHP's deal with Warner-Lambert has been the subject of several lawsuits filed by Pfizer.

Sources:

  • "Secret Approach by AHP to P&U Raises Questions About Warner-Lambert Deal" - The New York Times (no date)
  • "American Home Products' Advisers Make Secret Approach to Pharmacia & Upjohn" - Bloomberg (no date)
  • "Warner-Lambert Scrambles to Maintain Merger with American Home Products" - Dow Jones (no date)
  • "Pharmacia & Upjohn's Market Value is $27bn" - Yahoo Finance (no date)
  • "Goldman Sachs Advises Pharmacia & Upjohn" - The Wall Street Journal (no date)