Pfizer's Takeover of Pharmacia Expected to Impact HQ Buy

Responding to questions from reporters just after the merger was announced late Monday, Pharmacia chairman/CEO Fred Hassan indicated that plans to renovate the AT&T complex have been halted, at least until the merged companies decide whether they need it or not. Hassan indicated his belief that "it is re-sellable at a very good price."

Also responding to reporters' queries, Pfizer chairman Hank McKinnell indicated that his company would indeed look seriously into selling the newly acquired asset, and that he would not consider moving Pfizer's own headquarters out of New York City to the Basking Ridge campus.

As far as the merger itself, "this is an extraordinary opportunity to combine two of the fastest-growing and most innovative pharmaceutical companies and to position Pfizer for sustained long-term leadership in the global pharmaceutical industry," according to McKinnell. He indicated that Hassan, his Pharmacia counterpart, would become vice chairman of the merged companies, which would retain the Pfizer name.

The two companies themselves put the value of the merger at $60 billion, although industry observers put it closer to the $53 billion range. In any case, it would create the world's largest drug maker with annual sales of about $48 billion and annual R&D expenditures of more than $7 billion. It would mix such brands as Pfizer's Lipitor and Viagra with Pharmacia's Celebrex and Rogaine. An existing synergy between the two companies is that they jointly market Celebrex.

Pfizer got as big as it already is through an earlier merger with the Morris Plains, NJ-based Warner-Lambert. Pharmacia, meanwhile, burst onto the local scene four years ago by buying the Michigan-based Upjohn as well as Monsanto's drug business and relocating the combined companies' headquarters from London to New Jersey. The company's subsequent growth has been a boon to the state's real estate market, but the market's current softness could make it difficult for the company to shed its now-massive holdings, at least in the short term, according to observers.

The two companies also employ a total of almost 6,500 in the Garden State, and job cuts are expected if the merger passes muster with shareholders and regulators. Officials of the two companies won't comment yet on the size and scope of staff cuts, however.