Close to five years after Pfizer acquired Wyeth globally for $68 billion, the two drug companies have embarked on the last mile of their legal merger in India to project a single Pfizer brand.
The boards of both companies, on Saturday, approved the merger proposal, and arrived at a swap-ratio (post-interim-dividend) of seven shares of Pfizer India for every 10 shares held by the shareholders of Wyeth.
The entire process including regulatory and legal approvals is expected to take about nine months.
Addressing the why now, Pfizer and Wyeth’s India-head, Aijaz Tobaccowalla, said that over the years the two companies did harmonise operationally.
But it still was not the most efficient structure, in terms of operating, with two listed companies, for instance, requiring separate tax-payments, and so on, he explained.
There was a benefit in running a single company and having a single brand in terms of focus and attracting talent, he said.
The combined entity also made sense as Wyeth had a bigger impact from the drug pricing policy and foreign exchange stand-point, as compared to Pfizer, though both had been impacted by the trade-margins related issues in the market place, he added.
The single “go-to-market” strategy would help de-risking the company in terms of exposure to the drug pricing policy and foreign exchange fluctuations, he said.
At present, Pfizer has 2,500 employees and Wyeth 480, and the combined entity’s ranking gets moved up within the top 10 in India, from the earlier positions of 18th and 28{+t}{+h}, he said.
Dividend payout
Pfizer would issue 15.90 million additional shares to shareholders of Wyeth, he said, and the US-based parent company would hold 63.9 per cent in the final entity.
The two boards also announced an interim dividend of Rs 360 per share and Rs 145 per share, respectively.
Explaining the “robust” dividend payout, he said, the companies had accumulated cash over the years, and since acquisition opportunities in the market place did not have realistic valuations, the companies decided to share benefits with the shareholders. Pfizer’s dividend payout was Rs 1,270 crore, and Wyeth Rs 370 crore, he said.