Pfizer and Wyeth announced that they have entered into a definitive joint venture worth US$68 billion wherein Pfizer will buy Wyeth in a cash-and-stock transaction currently valued at US$50.19 per share.

The Boards of Directors of both companies have approved the combination.

The combined company will create one of the most diversified conglomerates in the global health care industry. The venture is expected to generate more quickly and effectively to meet changing health care needs. The merger is also expected to create strong product pipeline in leading scientific and manufacturing capabilities, and a premier global footprint in health care.

With its broad and diversified global product portfolio and reduced dependence on small molecules, the new company will be positioned for improved, consistent, and stable top-line and EPS growth and sustainable shareholder value in the short and long term. It is expected that no drug will account for more than 10 percent of the combined company's revenue in 2012.

Under the new terms, each outstanding share of Wyeth common stock will be converted into the right to receive US$33 in cash and 0.985 of a share of Pfizer common stock, subject to the terms of the merger agreement. Based on the closing price of Pfizer stock as of January 23, 2009, the stock component is valued at US$17.19 per share. The deal will provide immediate value to Wyeth shareholders through the cash component, as well as continued participation in the future prospects expected to result from the combination through their ownership of approximately 16 percent of Pfizer's shares.

The agreement is expected to gradually increase Pfizer's adjusted diluted earnings per share in the second full year after closing. The transaction is anticipated to yield cost savings of approximately US$4 billion to be fully realized by the third year after closing. Savings are expected in selling, informational and administrative functions, research and development, and manufacturing.

The transaction will be financed through a combination of cash, debt and stock. A consortium of banks has provided commitments for a total of US$22.5 billion in debt.

In connection with the proposed transaction between Pfizer and Wyeth, the Board of Directors of Pfizer has said that effective with the dividend to be paid in the second quarter of 2009, it will reduce Pfizer's quarterly dividend per share to US$0.16, which continues to be competitive with other industry participants. Pfizer believes the transaction offers significant opportunities to enhance long-term shareholder value.