Pfizer, Pharmacia Shareholders Approve Merger

BASKING RIDGE, NJ-Now that shareholders of both companies have approved the $60-billion takeover of Pharmacia by Pfizer, what’s to become of the sprawling former AT&T campus here, acquired last summer by Pharmacia for $200 million? It had been assumed that the property would become surplus and quickly returned to the market, but statements made by Pfizer chairman Hank McKinnell indicate that nothing is etched in stone.

Those comments came last Friday after Pfizer shareholders approved the proposed merger by 96% of the votes cast. McKinnell told reporters after the vote that moving the combined companies’ New Jersey operations to the 2.6 million-sf, 140-acre campus is one of the possibilities being explored. A Pfizer spokesperson declined further comment.

The next piece of the puzzle fell into place yesterday when 99% of Pharmacia shareholders voted to approve the merger, which is now expected to be completed in the first quarter of next year. “The companies continue to make progress in obtaining other approvals necessary to complete the transaction,” according to a Pharmacia spokesperson, who declined to comment on possible real estate decisions. The merger still requires final okays from regulators in both the US and Europe.

Before the merger, Pharmacia was expected to combine its operations in Peapack and Bedminster, NJ to the now-former AT&T campus here. The merger leaves the combined companies with Pharmacia’s Peapack, Bedminster and Basking Ridge campuses, and Pfizer’s sprawling facilities in Morris Plains. The latter was Warner-Lambert’s headquarters until Pfizer took over that pharma company in 2000.

The New York-based Pfizer has said that it will keep its HQ in Gotham, and the latest merger leaves the company with an excess of space in the Garden State. The biggest factors in favor of consolidating at the Basking Ridge campus, according to observers, are its size–it’s by far the largest of the three locations–and the fact that it’s the most centrally located.

However, Pfizer may want to retain the Morris Plains location, considering the company just spent an estimated $30 million to refurbish it. That would set up a two-location scenario for the merged companies, because the Morris Plains site is said to be maxed out in terms of occupancy.

The question remains as to why Pharmacia bought the AT&T campus anyway, considering it was apparently deep into merger talks with Pfizer, a deal that was announced just two weeks after Pharmacia closed on the property.

“They did it for leverage,” asserts a top real estate broker, who did not wish to be identified. “Pharmacia wanted Pfizer to think they weren’t serious about merging, and by closing on the AT&T property at that stage of the merger discussions they succeeded in driving up the price that Pfizer is paying for Pharmacia.”