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The Battle for Warner-Lambert.

NEW YORK -- The stakes are clear in the battle to determine which combination of drug companies will emerge -- for now at least -- as the world's largest pharmaceutical firm.

Less certain is whether that alliance will culminate as originally planned between American Home Products Corp. (AHP) and Warner-Lambert Co. or whether Pfizer Inc. will capture the Warner-Lambert entity or some other player will enter the fray and come out as the winner.

But for now Pfizer is continuing a high-profile offensive to acquire Warner-Lambert, and AHP and Warner-Lambert continue to insist that their plan to combine as AmericanWarner Inc. is on track.

"Given our strength, pursuing a strategic combination with Warner-Lambert represents a unique opportunity to create the fastest-growing pharmaceutical company in the world with the widest therapeutic coverage in the industry," says Pfizer chairman and chief executive officer William Steere Jr.

Also in November the managements of AMP and Warner-Lambert reaffirmed their commitment to AmericanWarner.

"It's clear that our friendly merger with Warner-Lambert is strategically and financially compelling and that it will create enormous near- and long-term value for shareholders," said John Stafford, chairman, president and chief executive officer of AHP.

The AmericanWarner combination would also reportedly result in the world's No. 1 maker of over-the-counter drugs.

"AmericanWarner will benefit from substantial momentum and be well positioned to take full advantage of extraordinary growth opportunities on a global scale," says Lodewijk de Vink, chairman, president and chief executive officer of Warner-Lambert.

Other Pfizer executives have also continued firing salvos in the acquisition sweepstakes, particularly president and chief operating officer Hank McKinell.

"On all measures of financial performance Pfizer/Warner-Lambert significantly outperforms Warner-Lambert with American Home," he asserts. "The power of Pfizer alone is unmatched in our industry, but the historic opportunity to combine with Warner-Lambert would create an unbeatable platform for growth beyond even ours."

Pfizer has also amended an original complaint in Delaware state court against Warner-Lambert, its directors and AHP and has filed another suit that alleges Warner-Lambert breached its contractual obligations to Pfizer and that charges AHP interfered with Pfizer's relationship with Warner-Lambert (pertaining to Lipitor, jointly marketed by Pfizer and Warner-Lambert).

The revised complaint by Pfizer seeks a judgment that the Warner-Lambert directors breached their fiduciary duties and that the defensive provisions in the Warner-Lambert and AHP agreements are illegal.

Pfizer says it will seek consents for removing and replacing Warner-Lambert's board so that the company's shareholders can consider the Pfizer proposal. A January 24 date has been set for the preliminary injunction hearing, at which a ruling is expected on Pfizer's claims and the claims of Warner-Lambert that the 14.9% stock option granted to AHP by Warner-Lambert and other provisions of their merger agreement violate the fiduciary duties of the Warner-Lambert board.

In response to Pfizer's most recent suit Warner-Lambert issued a statement charging that "Pfizer continues to rush to the courthouse for relief but persists in failing to present the true underlying facts or cogent claims." The statement says that the company is studying the Lipitor agreements and is weighing action "that will best serve the interest of Warner-Lambert shareholders."
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Publication:Chain Drug Review
Geographic Code:1USA
Date:Dec 6, 1999
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