Pfizer Inc and American Home Products Corp (AHP) are locked in a multibillion dollar battle to buy the Warner-Lambert Co (W-L).
AHP and W-L announced what they called a "definitive merger agreement" on the morning of November 4. This would have created a $145bn (£89.5bn) company with annual sales of $26bn provisionally entitled American Warner Inc. The plan was described as a "merger of equals" which would create cost savings of $1.2bn a year after three years.
However, the ink was barely dry on this agreement when Pfizer announced a $82.4bn bid for Warner-Lambert late on November 4. This take-over would create an even larger company worth $200bn and with annual sales of $28bn and a $4bn research and development budget.
"This combination would create the strongest, most dynamic pharmaceutical company in the world," Mr William Steere (chairman, Pfizer) said.
In an open letter to Mr Lodewijk de Vink (chairman, W-L), Mr Steere said that he had tried repeatedly to discuss a merger of Pfizer and Warner-Lambert with Mr de Vink over the past two weeks but had been "rejected".
Warner-Lambert and Pfizer have jointly promoted the cholesterol lowering agent Lipitor (atorvastatin) since 1997, a deal which might now be in jeopardy after W-L's board of directors rejected Pfizer's offer and said that it was "disappointed with the mischaracterisation by Pfizer" of its dealings with the company.
At the same time, Pfizer has started a court action aimed at overturning a $2bn "poison pill" break up fee negotiated between AHP and W-L as part of the original merger deal.
The American merger action has, once again, stimulated speculation in London that Glaxo Wellcome Plc and Smithkline Beecham Plc might re-open merger talks which broke down last year.