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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1999
REGISTRATION NO. -
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PFIZER INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2834 13-5315170
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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235 EAST 42ND STREET
NEW YORK, NEW YORK 10017
(212) 573-2323
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MARGARET M. FORAN, ESQ.
PFIZER INC.
235 EAST 42ND STREET
NEW YORK, NEW YORK 10017
(212) 573-2323
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
DENNIS J. BLOCK, ESQ.
CADWALADER, WICKERSHAM & TAFT
100 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 504-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement and the
effective time of the merger of a wholly-owned subsidiary of the Registrant with
and into Warner-Lambert Company as described in the Agreement and Plan of Merger
dated as of November [ ], 1999.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT PRICE REGISTRATION FEE
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Common Stock in connection with the 2,136,808,950(2) N/A $75,001,994,145.00(3) $20,850,554.37(4)
Warner-Lambert Company Merger,
with par value of $0.05 per
share(1)..........................
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(1) Includes Pfizer Preferred Stock purchase rights which, until events
specified in Pfizer's Rights Agreement occur, will not be exercisable or
evidenced separately from the Common Stock.
(2) The maximum number of shares of Pfizer common stock issuable in connection
with the Merger in exchange for shares of Warner-Lambert common stock, based
on (i) the number of shares of common stock outstanding on July 31, 1999 as
reported in Warner-Lambert's quarterly report on Form 10-Q for the quarter
ended June 30, 1999 (854,723,580 shares) and (ii) the exchange ratio
applicable in the Merger (2.5 shares of Pfizer common stock for each share
of Warner-Lambert common stock).
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) and Rule 457(c) of the Securities Act, based on
the market value of the Warner-Lambert shares to be received by Pfizer in
the Merger, as established by the average of the high and low sales prices
of Warner-Lambert common stock on November 8, 1999 on the consolidated tape,
which was $87.75.
(4) This fee has been calculated pursuant to Section 6(b) of the Securities Act,
as .0278 of one percent of $75,001,994,145.00.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PFIZER INC.
CROSS REFERENCE SHEET
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ITEM NUMBER LOCATION IN JOINT PROXY/PROSPECTUS
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus......................... Facing Page of the Registration
Statement; Outside Front Cover Page
of Joint Proxy
Statement/Prospectus.
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Where You Can Find More
Information; Table of Contents;
Comparative Per Share Data.
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other
Information........................ Outside Front Cover Page of
Prospectus; Summary; Interests of
Certain Persons in the Merger;
Section Two -- Selected Financial
Data; Unaudited Pro Forma Condensed
Combined Financial Statements; The
Merger Transaction; Comparative Per
Share Market Price and Dividend
Information; The Merger Agreement;
Section Three -- Information About
the Meetings and Voting.
4. Terms of the Transaction........... Outside Front Cover Page of
Prospectus; Summary; The Merger
Transaction; The Merger Agreement;
Section Two -- Information About
the Meetings and Voting; Section
Four -- Certain Legal Information.
5. Pro Forma Financial Information.... Unaudited Pro Forma Condensed
Combined Financial Statements.
6. Material Contacts with the Company
Being Acquired..................... The Merger Transaction.
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters.......... *
8. Interests of Named Experts and
Counsel............................ *
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities.................... *
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ITEM NUMBER LOCATION IN JOINT PROXY/PROSPECTUS
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B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants........................ Summary; The Merger Transaction;
Where You Can Find More
Information.
11. Incorporation of Certain
Information by Reference........... Where You Can Find More
Information.
12. Information with Respect to S-2 and
S-3 Registrants.................... *
13. Incorporation of Certain
Information by Reference........... *
14. Information with Respect to
Registrants Other Than S-3 or S-2
Registrants........................ *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Company............................ Summary; The Merger Transaction;
Where You Can Find More
Information.
16. Information with Respect to S-2 or
S-3 Companies...................... *
17. Information with Respect to
Companies Other Than S-2 or S-3
Companies.......................... *
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be
Solicited.......................... Outside Front Cover Page of Joint
Proxy Statement/Prospectus;
Summary; Interests of Certain
Persons in the Merger; The Merger
Transaction; The Merger Agreement;
Section Three -- Information About
the Meetings and Voting; Section
Four -- Certain Legal Information;
Where You Can Find More
Information.
19. Information if Proxies, Consents or
Authorizations are not to be
Solicited or in an Exchange
Offer.............................. *
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* Omitted because the Item is inapplicable or the answer is negative.
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THIS DOCUMENT AND THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION
OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS DOCUMENT SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
[PRELIMINARY DRAFT DATED NOVEMBER 15, 1999, SUBJECT TO COMPLETION]
PFIZER INC.
IMPORTANT NOTICE
The information contained in this Joint Proxy Statement/Prospectus is
highly preliminary and subject to change. It is presented by Pfizer Inc.
("Pfizer") in order to describe a transaction between Pfizer and Warner-Lambert
Company ("Warner-Lambert") that would occur if and only if the transaction
proposed by Pfizer to Warner-Lambert on November 4, 1999 were accepted in the
form described in this Joint Proxy Statement/Prospectus (the "Merger").
Consequently, certain events that are described in this Joint Proxy
Statement/Prospectus in the present tense, have not yet occurred. Warner-Lambert
is a party to an agreement with American Home Products Corporation ("American
Home") that prohibits Warner-Lambert from discussing with Pfizer the transaction
proposed by Pfizer except in limited circumstances. At this time, Warner-
Lambert has not indicated that it intends to discuss the Pfizer proposal with
Pfizer or to accept Pfizer's proposal, either in its current form or in some
other form that might subsequently be proposed by Pfizer, Warner-Lambert or any
other person. There can be no assurance that the Pfizer proposal will be
accepted, or that if the Pfizer proposal were accepted, such proposal would be
accepted in its current form or in some other form. The terms of the Merger
Agreement described in this Joint Proxy Statement/Prospectus have not been
negotiated with Warner-Lambert and consequently, its terms could materially
change through the negotiation process or otherwise. PLEASE SEE "THE MERGER
TRANSACTION -- RISK FACTORS" BEGINNING ON PAGE I-6 FOR A DISCUSSION OF CERTAIN
FACTORS YOU SHOULD CONSIDER IN EVALUATING THE MERGER.
This Joint Proxy Statement/Prospectus does not constitute or commence a
tender offer or exchange offer for any securities of Warner-Lambert. This Joint
Proxy Statement/ Prospectus also does not, at this time, constitute or commence
a proxy solicitation for any matter that is subject to, or may be submitted for,
approval by the stockholders of Warner-Lambert. Unless and until Pfizer enters
into a transaction with Warner-Lambert and revises this Joint Proxy
Statement/Prospectus accordingly, stockholders of Warner-Lambert should not
tender any securities for purchase by Pfizer or deliver to Pfizer a proxy to
vote any shares of Warner-Lambert common stock with respect to any matter
whatsoever.
The Joint Proxy Statement/Prospectus is prepared on the assumption that it
is a Joint Proxy Statement/Prospectus of Pfizer and Warner-Lambert. As of this
time, the board of directors of Warner-Lambert has not reviewed or approved this
Joint Proxy Statement/ Prospectus, approved the transactions proposed by Pfizer
or called meetings for its stockholders to consider approving the transactions
proposed by Pfizer. The actual Joint Proxy Statement/Prospectus for any
transaction that may be entered into between Pfizer and Warner-Lambert may
differ substantially from this Joint Proxy Statement/Prospectus.
Information in this Joint Proxy Statement/Prospectus is presented only as
of the date hereof. We do not intend to file an amended or revised Joint Proxy
Statement/Prospectus unless and until we enter into a transaction with
Warner-Lambert.
Neither the Securities and Exchange Commission nor any state securities
regulator has approved the Pfizer stock to be issued under this Joint Proxy
Statement/Prospectus or determined if this Joint Proxy Statement/Prospectus is
accurate or adequate. Any representation to the contrary is a criminal offense.
Joint Proxy Statement/Prospectus dated , 1999, and first mailed to
stockholders on , 1999.
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TABLE OF CONTENTS
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SECTION ONE -- THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... I-1
SUMMARY..................................................... I-2
The Companies............................................. I-2
The Merger................................................ I-3
THE MERGER TRANSACTION...................................... I-6
General................................................... I-6
Pfizer Proposal........................................... I-6
Warner-Lambert Proposal................................... I-6
Warner-Lambert and American Home Information.............. I-6
Risk Factors.............................................. I-6
Background of the Merger.................................. I-7
Why the Warner-Lambert Stockholders Should Choose
Pfizer................................................. I-15
Our Reasons for the Merger; Recommendations of Our Boards
of Directors........................................... I-15
Accounting Treatment...................................... I-18
Material Federal Income Tax Consequences of the Merger.... I-19
Regulatory Matters Relating to the Merger................. I-20
Appraisal Rights.......................................... I-21
Federal Securities Laws Consequences; Stock Transfer
Restriction Agreements................................. I-21
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND
INFORMATION............................................... I-22
OPINIONS OF FINANCIAL ADVISORS.............................. I-23
INTERESTS OF CERTAIN PERSONS IN THE MERGER.................. I-23
THE MERGER AGREEMENT........................................ I-24
Structure of the Merger................................... I-24
Timing of Closing......................................... I-24
Merger Consideration...................................... I-24
Treatment of Warner-Lambert Stock Options................. I-24
Exchange of Shares........................................ I-25
Pfizer Board.............................................. I-25
Certain Covenants......................................... I-25
Representations and Warranties............................ I-27
Conditions to the Completion of the Merger................ I-27
Termination of the Merger Agreement....................... I-28
Other Expenses............................................ I-29
Amendments and Waivers.................................... I-29
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SECTION TWO -- SELECTED FINANCIAL DATA
PFIZER INC. AND SUBSIDIARIES -- HISTORICAL.................. II-2
WARNER-LAMBERT COMPANY -- HISTORICAL........................ II-3
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA -- PFIZER AND
WARNER-LAMBERT............................................ II-4
COMPARATIVE PER SHARE DATA -- PFIZER AND WARNER-LAMBERT..... II-5
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS................................................ II-6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS................................................ II-17
SECTION THREE -- INFORMATION ABOUT THE MEETINGS AND VOTING
Matters Relating to the Meetings............................ III-1
Vote Necessary to Approve Pfizer and Warner-Lambert
Proposals................................................. III-3
Proxies..................................................... III-3
Other Business; Adjournments................................ III-5
SECTION FOUR -- CERTAIN LEGAL INFORMATION
COMPARISON OF PFIZER AND WARNER-LAMBERT STOCKHOLDER
RIGHTS...................................................... IV-1
Summary of Material Differences Between Current Rights of
Warner-Lambert Stockholders and Rights Those Stockholders
Will Have as Pfizer Stockholders Following the Merger..... IV-1
DESCRIPTION OF PFIZER CAPITAL STOCK......................... IV-3
Authorized Capital Stock.................................. IV-3
Pfizer Common Stock....................................... IV-3
Pfizer Preferred Stock.................................... IV-4
Transfer Agent and Registrar.............................. IV-4
Stock Exchange Listing; Delisting and Deregistration of
Warner-Lambert Common Stock............................ IV-4
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS............ IV-4
LEGAL MATTERS............................................... IV-5
EXPERTS..................................................... IV-5
SECTION FIVE -- ADDITIONAL INFORMATION FOR STOCKHOLDERS
FUTURE STOCKHOLDER PROPOSALS................................ V-1
Pfizer.................................................... V-1
Warner-Lambert............................................ V-1
WHERE YOU CAN FIND MORE INFORMATION......................... V-1
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SECTION ONE
THE MERGER
SEE CAUTIONARY NOTICE ON COVER PAGE
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHEN AND WHERE ARE THE STOCKHOLDER MEETINGS?
A: The stockholder meeting of Pfizer will take place on [ ], 1999
at [ ] in New York, New York. The stockholder meeting of
Warner-Lambert will take place on [ ], 1999 in [ , ].
Q: WHAT DO I NEED TO DO NOW?
A: Just mail your signed proxy card in the enclosed return envelope or vote by
telephone or the internet, as soon as possible, so that your shares may be
represented at your meeting. In order to assure that your vote is obtained,
please give your proxy as instructed on your proxy card even if you currently
plan to attend your meeting in person.
Q: WHAT SHOULD I DO IF I WANT TO CHANGE MY VOTE?
A: Just send in a later-dated, signed proxy card to your company's Secretary or
vote again by telephone or the internet before your meeting. Or, you can attend
your meeting in person and vote. You may also revoke your proxy by sending a
notice of revocation to your company's Secretary at the address under
"Summary-The Companies".
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: If you do not provide your broker with instructions on how to vote your
"street name" shares, your broker will not be permitted to vote them on the
Merger. You should therefore be sure to provide your broker with instructions on
how to vote your shares. Please check the voting form used by your broker to see
if it offers telephone or internet voting. If you are a Pfizer stockholder and
do not give voting instructions to your broker, you will not be counted as
voting for purposes of the Stock Issuance Proposal (as defined below) unless you
appear in person at the Pfizer meeting with a legal proxy from the record
holder. If you are a Warner-Lambert stockholder and do not give voting
instructions to your broker, you will, in effect, be voting against the Merger
unless you appear in person at your stockholder meeting and vote in favor of the
Merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If the Merger is completed, we will send Warner-Lambert stockholders
written instructions for exchanging their stock certificates. Pfizer
stockholders will keep their existing certificates.
Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A: We expect no changes in the dividend policies of either company before the
Merger. The payment of dividends by the combined company in the future, however,
will depend on business conditions, the combined company's financial condition
and earnings, and other factors.
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Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working towards completing the Merger as quickly as possible. In
addition to stockholder approvals, we must also obtain regulatory approvals. We
hope to complete the Merger by [ ].
Q: WHO DO I CALL IF I HAVE QUESTIONS ABOUT THE MEETINGS OR THE MERGER?
A: Pfizer stockholders may call 1-800-[ ]-[ ].
Warner-Lambert stockholders may call
1-800-[ ]-[ ].
AS OF THE DATE OF FILING OF THIS JOINT PROXY STATEMENT/ PROSPECTUS NO MERGER
AGREEMENT HAS BEEN EXECUTED BETWEEN PFIZER AND WARNER-LAMBERT. THE FOLLOWING
DESCRIPTION DESCRIBES PROVISIONS IN PFIZER'S MERGER PROPOSAL TO WARNER-LAMBERT
THAT WOULD OCCUR IF AND ONLY IF THE TRANSACTION PROPOSED BY PFIZER TO
WARNER-LAMBERT ON NOVEMBER 4, 1999 WERE ACCEPTED IN ITS CURRENT FORM AND PFIZER
AND WARNER-LAMBERT ENTER INTO A CUSTOMARY MERGER AGREEMENT.
SEE CAUTIONARY NOTICE ON COVER PAGE
SUMMARY
This summary highlights selected information from this Joint Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the Merger fully and for a more complete
description of the legal terms of the Merger, you should read this document and
the documents we have referred you to carefully. See "Where You Can Find More
Information."
THE COMPANIES
Pfizer Inc.
235 East 42nd Street
New York, New York 10017
Pfizer is a research-based global pharmaceutical company that discovers,
develops, manufactures and markets innovative medicines for humans and animals.
The company reported revenues of over $13.5 billion for 1998, and estimates 1999
revenues to exceed $16 billion. The company's Norvasc, Zoloft and Zithromax
products all had worldwide sales exceeding $1 billion in 1998. Those products,
along with Viagra and Diflucan, as well as the co-promoted and co-marketed
products Lipitor and Celebrex, are each expected to have sales of more than $1
billion in 1999. Pfizer employs more than 46,000 people worldwide, and expects
to spend about $2.8 billion on research and development in 1999.
Warner-Lambert Company
201 Tabor Road
Morris Plains, NJ 07950
I-2
<PAGE> 9
Warner-Lambert is a global pharmaceutical, consumer health care and
confectionery company. Its central research focus is on heart disease, lowering
cholesterol, diabetes, infectious diseases, disorders of the central nervous
system and women's health care. Its cholesterol-lowering drug, Lipitor, which is
co-promoted by Pfizer, is the most prescribed cholesterol-lowering agent in the
United States. In 1999, analysts have estimated that Warner-Lambert's revenues
will exceed $12 billion and the company will invest more than $1.2 billion in
research and development. It currently employs more than 43,000 people
worldwide.
THE MERGER
The proposed Merger Agreement will be attached as Exhibit 2.1 to this Joint
Proxy Statement/Prospectus. We encourage you to read the proposed Plan and
Agreement of Merger dated , 1999 (the "Merger Agreement") carefully
and in its entirety when available as it is the legal document that would govern
the Merger. For a summary of the Merger Agreement, see "The Merger Agreement."
WHAT WARNER-LAMBERT STOCKHOLDERS WILL RECEIVE
As a result of the Merger, Warner-Lambert stockholders will receive, for
each share of Warner-Lambert common stock, 2.5 shares of Pfizer common stock.
Pfizer will not issue any fractional shares in the Merger. See "The Merger
Agreement -- Exchange of Shares."
OWNERSHIP OF PFIZER AFTER THE MERGER
Pfizer will issue approximately shares of Pfizer common
stock to Warner-Lambert stockholders in the Merger. The shares of Pfizer common
stock to be issued to Warner-Lambert stockholders in the Merger will represent
approximately 35% of the outstanding Pfizer common stock after the Merger. This
information is based on the number of Pfizer and Warner-Lambert shares
outstanding on November 12, 1999 and does not take into account stock options or
other equity-based awards.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE MERGER
For Pfizer stockholders: Approval of the stock issuance proposal requires
the affirmative vote of at least a majority of the votes cast by the holders of
Pfizer common stock, provided that the total votes cast represent a majority of
the outstanding shares of Pfizer common stock.
For Warner-Lambert stockholders: Approval of the Merger requires the
affirmative vote of at least a majority of the outstanding shares of
Warner-Lambert common stock.
CONDITIONS TO THE COMPLETION OF THE MERGER
The completion of the Merger depends upon a number of conditions, including
the following:
- approval by the Pfizer and Warner-Lambert stockholders;
- expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") and
receipt of material regulatory approvals;
- absence of any law or court order prohibiting the Merger;
I-3
<PAGE> 10
- receipt of opinions of counsel to Pfizer and Warner-Lambert that the
Merger will qualify as a tax-free reorganization;
- material accuracy, as of closing, of the representations and
warranties made by the other party; and
- receipt of letters from independent public accountants of Pfizer and
Warner-Lambert that no conditions exist that would preclude the Merger
from being accounted for as a pooling-of-interests.
TERMINATION OF THE MERGER AGREEMENT
(a) The Merger Agreement may be terminated by the mutual written consent of
both Pfizer and Warner-Lambert;
(b) Either Pfizer or Warner-Lambert can terminate the Merger Agreement if
any of the following occurs:
- the Merger has not been completed by May 15, 2000, unless the failure
to complete the Merger is a result of either Pfizer's or
Warner-Lambert's failure to fulfill any material obligations under the
Merger Agreement;
- there is a permanent legal prohibition to closing the Merger;
- Pfizer or Warner-Lambert stockholders fail to give the necessary
approval at a duly held meeting;
- either Pfizer's or Warner-Lambert's Board fails to recommend the
Merger or withdraws, modifies or qualifies in any adverse manner, its
approval or recommendation of the Merger, or recommends a superior
offer, or
- Pfizer or Warner-Lambert has materially breached its obligations or
covenants under the Merger Agreement.
BOARD OF DIRECTORS OF PFIZER AFTER THE MERGER
Following the Merger, the Board of Directors of Pfizer will have [ ]
members, including all of the current Pfizer directors and [ ] directors
designated by Warner-Lambert.
REGULATORY APPROVALS
Completion of the Merger will not occur until after receipt of certain
regulatory approvals required for the transaction. The HSR Act, as amended,
provides that certain required materials and information must be furnished to
and reviewed by the Antitrust Division of the Justice Department or the Federal
Trade Commission. Pfizer may find that other regulatory approvals are required
after it has an opportunity to conduct further due diligence investigations with
respect to Warner-Lambert operations. None of these regulatory approvals have
been requested at this time. See "The Merger Transaction -- Regulatory Matters
Relating to the Merger."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
A Warner-Lambert stockholder's receipt of Pfizer common stock in the Merger
generally will be tax-free for United States federal income tax purposes, except
for taxes which may result from the receipt of cash instead of any fractional
share of Pfizer common stock.
I-4
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COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Both Pfizer and Warner-Lambert common stock are listed on the New York
Stock Exchange. On November 3, 1999, the last full trading day before Pfizer
publicly announced its proposal to Warner-Lambert, Pfizer common stock closed at
$38.562 and Warner-Lambert common stock closed at $83.812. On November 12, 1999,
the last full trading day before the filing of this Joint Proxy
Statement/Prospectus, Pfizer common stock closed at $35.125 and Warner-Lambert
common stock closed at $93.625.
LISTING OF PFIZER COMMON STOCK
The shares of Pfizer common stock to be issued in the Merger will be listed
on the New York Stock Exchange under the ticker symbol "PFE."
APPRAISAL RIGHTS
The holders of Pfizer and Warner-Lambert common stock do not have any
dissenters' appraisal rights under Delaware law in connection with the Merger.
INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER
[To come.]
ACCOUNTING TREATMENT
Pfizer and Warner-Lambert expect the Merger to qualify as a
pooling-of-interests for accounting and financial reporting purposes, which
means that Pfizer and Warner-Lambert will be treated as if they had always been
combined for accounting and financial reporting purposes.
AS OF THE DATE OF FILING OF THIS JOINT PROXY STATEMENT/ PROSPECTUS, NO MERGER
AGREEMENT HAS BEEN EXECUTED BETWEEN PFIZER AND WARNER-LAMBERT. THE FOLLOWING
DESCRIPTION DESCRIBES PROVISIONS IN PFIZER'S MERGER PROPOSAL TO WARNER-LAMBERT
THAT WOULD OCCUR IF AND ONLY IF THE TRANSACTION PROPOSED BY PFIZER TO
WARNER-LAMBERT ON NOVEMBER 4, 1999 WERE ACCEPTED IN ITS CURRENT FORM AND PFIZER
AND WARNER-LAMBERT ENTER INTO A CUSTOMARY MERGER AGREEMENT.
SEE CAUTIONARY NOTICE ON COVER PAGE
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<PAGE> 12
THE MERGER TRANSACTION
GENERAL
Pfizer's Board of Directors (the "Pfizer Board") is using this Joint Proxy
Statement/ Prospectus to solicit proxies from the holders of Pfizer common stock
for use at the Pfizer meeting. Warner-Lambert's Board of Directors (the
"Warner-Lambert Board") is also using this document to solicit proxies from the
holders of Warner-Lambert common stock for use at the Warner-Lambert meeting.
PFIZER PROPOSAL
At the Pfizer meeting, holders of Pfizer common stock will be asked to vote
upon approval of the issuance of Pfizer common stock pursuant to the Merger
Agreement to be entered into among Pfizer, Warner-Lambert and a wholly-owned
Pfizer merger subsidiary. We sometimes refer to this proposal as the "Stock
Issuance Proposal."
WARNER-LAMBERT PROPOSAL
At the Warner-Lambert meeting, holders of Warner-Lambert common stock will
be asked to vote upon approval and adoption of the Merger Agreement and the
Merger. We sometimes refer to this proposal as the "Merger Proposal."
WARNER-LAMBERT AND AMERICAN HOME INFORMATION
While Pfizer has included herein information concerning Warner-Lambert and
American Home insofar as it is known or reasonably available to Pfizer,
Warner-Lambert and American Home are not affiliated with Pfizer (other than
through the Marketing Agreement described below) and neither Warner-Lambert nor
American Home have permitted Pfizer access to their books and records.
Therefore, information concerning Warner-Lambert or American Home that has not
been made public is not available to Pfizer. Pfizer was not involved in the
preparation of public information and statements made by, or about,
Warner-Lambert or American Home, and is not in a position to verify any such
information or statements and accepts no responsibility for the accuracy or
completeness thereof.
RISK FACTORS
In deciding whether to vote in favor of either the Stock Issuance Proposal
or the Merger Proposal, you should read carefully this Joint Proxy
Statement/Prospectus and the documents to which we refer you. You should also
carefully consider the following factors:
BENEFITS OF THE COMBINATION MAY NOT BE REALIZED
If we complete the Merger, we will integrate two companies that have
previously operated independently. We may not be able to integrate the
operations of Pfizer and Warner-Lambert without encountering difficulties.
The diversion of the attention of management to the integration effort
along with any difficulties encountered in combining operations could
adversely affect the combined company's businesses. We expect to realize at
least $1.2 billion in annual cost savings and efficiencies from the
combination by the end of 2002. However, we cannot be sure that we will be
able to
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<PAGE> 13
achieve these cost savings and efficiencies in the amounts expected or as
quickly as we now expect. Actual cost savings may be higher or lower than
we currently expect, and may take a longer or shorter time to achieve than
we currently expect. Our estimates concerning the amount and timing of cost
savings have been developed by our management and reflect our best judgment
based on publicly-available information about Warner-Lambert.
More generally, our views about the expected benefits of our proposed
combination are based on publicly-available information about
Warner-Lambert. Warner-Lambert may have other information, unavailable to
us, that would significantly affect our estimates or views.
FIXED EXCHANGE RATIO OF OUR OFFER COULD WORK TO YOUR DISADVANTAGE
Upon consummation of the Merger, each share of Warner-Lambert common
stock will be converted into the right to receive 2.5 shares of Pfizer
common stock. The value of Pfizer common stock and/or Warner-Lambert common
stock on the closing date of the Merger may vary significantly from the
price as of the date of execution of the Merger Agreement, the date hereof
or the date on which stockholders vote on the Merger, due to, among other
factors:
- market perception of the cost savings and efficiencies expected to
be achieved by the Merger,
- changes in the business, operations or prospects of Pfizer or
Warner-Lambert,
- market assessments of the likelihood that the Merger will be
consummated and the timing, and
- general market and economic conditions.
Because the exchange ratio will not be adjusted, the relative value of
the Pfizer common stock issued in the Merger may be lower than the relative
market value of such shares at the time the Merger is approved by
Warner-Lambert stockholders.
BACKGROUND OF THE MERGER
In 1996, Pfizer and Warner-Lambert entered into a series of agreements
(collectively, the "Marketing Agreement") to co-promote and co-market worldwide
the cholesterol-lowering drug known as Lipitor, which was developed by
Warner-Lambert. Under the terms of the Marketing Agreement, Pfizer was granted
the right to promote and market Lipitor exclusively in certain foreign countries
and in partnership with Warner-Lambert in the United States and certain other
foreign countries in exchange for one-time payments and other considerations. In
countries where Pfizer and Warner-Lambert co-promote and co-market Lipitor,
Pfizer receives a percentage of sales and shares in the promotional and
marketing costs. The combined marketing effort with respect to Lipitor has been
extremely successful as worldwide sales for this drug are anticipated to be
approximately $3.5 billion in 1999, a 60% increase over 1998 sales. Prior to
entering into the Marketing Agreement, Pfizer and Warner-Lambert entered into a
confidentiality agreement with a standstill provision, which, among other
things, prohibited Pfizer from making a merger proposal to Warner-Lambert
without first receiving permission from Warner-Lambert or until a third-party
made such a proposal.
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<PAGE> 14
In the latter part of October 1999, Pfizer became aware of rumors
concerning a possible business combination involving Warner-Lambert and an
unknown entity. Given Pfizer's existing strategic relationship with
Warner-Lambert, and Pfizer's interest in expanding its relationship with
Warner-Lambert, Pfizer attempted to inquire into these rumors. On October 25,
1999, William C. Steere, Jr., Chairman of the Board and Chief Executive Officer
of Pfizer, sent the following letter to Lodewijk de Vink, Chairman of the Board
and Chief Executive Officer of Warner-Lambert:
October 25, 1999
Mr. Lodewijk de Vink
Chairman and CEO
Warner-Lambert Co.
201 Tabor Road
Morris Plains, NJ 07950
Dear Lodewijk:
As I am sure you are aware, there are "rumors on the street" that a
significant company, or companies, in our industry are considering a
business combination with your Company. As we have come to know the
quality of products, management and operations of Warner-Lambert over
the last several years, we expect you will attract substantial
acquisition interest over time. The need for more resources and to
share science and technology is more apparent every day and is
evidenced by continued industry consolidation. Our strategic
relationship with you since 1996 is a good example of the advantages
obtainable through consolidation of our strengths, and has convinced
us of the value of exploring a business combination between our
Companies.
As you know, our respective Companies entered into a Confidentiality
Agreement as of March 4, 1996 with respect to the joint development
and marketing of Lipitor. That Confidentiality Agreement contains a
"standstill" provision. If you have any interest in exploring a
business combination, we believe a transaction between our companies
makes the most business sense, and we should collectively consider
expanding the relationship between our companies beyond the initiative
we recently both announced. We would like to explore with you the
merits of our interest and ideas. We believe that such a business
combination would provide substantial value both in the short and long
run to our shareholders, employees, customers and other constituents
that you serve. Because of our strategic relationship with your
Company, we represent the best opportunity to establish a combined
business that will provide your shareholders the highest possible
value. The concept that we have in mind would yield to them, on a
tax-free basis, an investment in a larger and stronger Company with
more liquidity and combined growth potential that would substantially
enhance profitability. Our opportunities for your employees and
management would also be enhanced and the risk of an undesirable
suitor would be effectively eliminated. We believe strongly that the
combination of our Companies would provide the opportunity for the
best possible transaction in what could be the strongest, most
creative pharmaceutical company in the world.
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<PAGE> 15
Our continuing business relationship with Warner-Lambert is very
important to us and we certainly would not take any action that
could jeopardize that relationship. Also, of course, the March 4th
Confidentiality Agreement requires us to seek your permission to
make a proposal along the lines we have in mind. Recognizing the
significant advantages to our respective shareholders, we would
encourage you to grant that permission so that you and your Board
can review for yourselves the value we place on our historical
relationship with your Company, on your talented management and
employee pool, and on the positive effects that a business
combination between our Companies could have.
We would be delighted to meet with you to discuss our thoughts at
your convenience.
Sincerely,
/s/ William C. Steere, Jr.
Pfizer did not receive a response to Mr. Steere's October 25, 1999 letter
until October 27, 1999, when Mr. de Vink called Mr. Steere and expressed his
concern over the October 25, 1999 letter, and his belief that the letter
violated the spirit of the standstill provision. Mr. Steere again sought
permission to make a proposal and requested Pfizer's release from the standstill
provision in light of the market rumors involving a potential merger between
Warner-Lambert and American Home. A meeting between Messrs. Steere and de Vink
was scheduled for later that day at Pfizer's offices in New York. At the
meeting, Mr. de Vink discussed the October 25, 1999 letter, and in particular,
expressed concern about Pfizer's much greater size and indicated he would be
interested only in pursuing a merger involving a company of equal size to
Warner-Lambert. Mr. Steere, as he had done in the October 25, 1999 letter,
emphasized the advantages of a combination between Warner-Lambert and Pfizer.
Mr. de Vink then questioned Mr. Steere about the role that would be played by
Warner-Lambert's current management in a combined entity with Pfizer. Mr. Steere
responded that such topic would be a subject for future discussion. Mr. de Vink
indicated that he would be leaving for Europe and that they could discuss
matters further on his return.
The following day, October 28, 1999, Mr. de Vink called Mr. Steere and
indicated that he was not interested in any transaction involving Pfizer because
Pfizer was too large, and that if Warner-Lambert combined with any company it
would have to be one of equal size.
On Tuesday, November 2, 1999, Dr. Anthony H. Wild, the President of Warner-
Lambert's pharmaceutical sector, met with Dr. Henry A. McKinnell, Pfizer's
President and Chief Operating Officer. During the meeting, Dr. Wild and Dr.
McKinnell agreed that the two companies were successfully working together with
their existing successful marketing agreement involving Lipitor and that each
company wished to expand the strategic relationship into other areas. Dr.
McKinnell asked Dr. Wild about the rumors concerning a possible merger involving
Warner-Lambert and another pharmaceutical industry competitor, and was told by
Dr. Wild that there was nothing imminent, and that an announcement, if any,
would not occur for several months, and would probably not occur until next
year, if at all.
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<PAGE> 16
On Wednesday, November 3, 1999, two Pfizer directors, M. Anthony Burns and
Dana G. Mead, approached two Warner-Lambert directors, William R. Howell and
Robert N. Burt. Mr. Mead approached Mr. Burt at a business function that both
were attending and expressed an interest in talking "director to director." Mr.
Mead asked Mr. Burt if he was aware of Pfizer's interest in a merger with
Warner-Lambert. Mr. Burt indicated that he had not been informed that Pfizer was
interested in pursuing a merger with Warner-Lambert. Mr. Burt also indicated
that Pfizer would not be able to do a deal with Warner-Lambert because of a
"pooling" issue. Also on November 3, Mr. Burns telephoned Mr. Howell to discuss
Pfizer's interest in a merger with Warner-Lambert. In response, Mr. Howell
indicated that the Warner-Lambert directors supported Mr. de Vink. We understand
that Mr. Burt reported his conversation with Mr. Mead at the Warner-Lambert
Board meeting held that evening.
Following an article in that day's Wall Street Journal that reported that
Warner-Lambert was about to enter into a so-called "merger of equals" with
American Home, Mr. Steere again wrote to Mr. de Vink. A copy of that letter
follows:
November 3, 1999
Mr. Lodewijk de Vink
Chairman and CEO
Warner-Lambert Co.
201 Tabor Road
Morris Plains, NJ 07950
Dear Lodewijk:
I was extremely surprised and disappointed to read in this morning's
Wall Street Journal that WL is about to enter into a business
combination with AHP in a so called "merger of equals" and without any
premium to the shareholders of WL. This is especially the case in
light of my recent letter to you and our meeting of October 27, in
which I made clear Pfizer's willingness to provide a vastly superior
proposal to WL and its shareholders. We are still anxious to have you
and your Board's support for our making an offer.
Having read the article on your pending merger with AHP, a company not
only substantially smaller than we are, but certainly not positioned
in the key pharmaceutical industry as we are, I feel compelled to use
this opportunity to reiterate what I believe are the advantages of a
transaction with us. They include:
- The best possible price for your Shareholders
- Substantial increase in market depth and liquidity
- The greatest synergies for the combined companies
- Complementary technology and science
- Worldwide marketing exposure for your products, especially your
number 1 product, Lipitor, which is achieving its excellent
market acceptance in large part as a result of our world class
marketing and sales organizations working in conjunction with
yours
- Substantial expansion of opportunities for management and key
employees
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<PAGE> 17
- Long term value for all our Shareholders
- Substantial new R&D, marketing, manufacturing and capital
resources for WL important projects
- Strengthening your participation in future industry growth and
consolidation -- we would be putting together the two fastest
growing companies in the industry
Because of our strategic relationship with your Company, we represent
the best opportunity to establish a combined business that will
provide your shareholders the highest possible value. We would like to
discuss with you the merits of our interest and ideas. We believe that
a business combination between our two companies would provide
substantial value both in the short and long term to your
shareholders, employees, customers and other constituents that you
serve. The concept that we have in mind would yield to them, on a
tax-free basis, an investment in a larger and stronger Company with
more liquidity and combined growth potential that would substantially
enhance profitability. Our opportunities for your employees and
management would also be enhanced. We believe strongly that the
combination of our Companies would provide the opportunity for the
best possible transaction with an attractive premium for your
shareholders in what could be the strongest, most creative
pharmaceutical company in the world.
We would be delighted to meet with you to discuss our thoughts. We
would urge that such a meeting take place at your earliest
convenience.
Sincerely,
/s/ William C. Steere, Jr.
Upon the announcement on November 4, 1999, of the merger agreement between
American Home and Warner-Lambert, Pfizer was released from the standstill
provision. Mr. Steere immediately sent the following letter to Mr. de Vink
setting forth a proposed Merger between Pfizer and Warner-Lambert and
encouraging Warner-Lambert to immediately consider the proposal:
November 4, 1999
Mr. Lodewijk de Vink
Chairman and CEO
Warner-Lambert Co.
201 Tabor Road
Morris Plains, NJ 07950
Dear Lodewijk:
As you know from our previous communications, my Board of Directors
and I believe firmly that Pfizer and Warner-Lambert Co., the two
fastest-growing companies in the industry, would represent a
compelling combination and excellent strategic fit, creating superior
value for all our shareholders. We have not made a definitive proposal
prior to this time as a result of the "standstill" provision in the
confidentiality agreement we entered into on March 4, 1996. Because of
your announcement today relating to the agreement with American Home
Products and
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<PAGE> 18
the resulting release from the standstill, we are pleased to make the
following proposal.
I want to reiterate that I have repeatedly tried over the past few
weeks to discuss with you the merits of a combination between Pfizer
and Warner-Lambert. Unfortunately, our efforts have been rejected -- a
response that is particularly disappointing given the substantial
success represented by our partnership in developing and marketing
Lipitor, which both our companies have publicly acknowledged. My
letters dated November 3 and October 25 -- as well as our conversation
on October 27 -- clearly demonstrated our desire to make the best
possible proposal for your company and its shareholders within the
"standstill" framework we had agreed to.
Since the standstill agreement is no longer operative, we are now
prepared to offer a tax-free merger in which your shareholders would
receive 2 1/2 shares of Pfizer common stock for each outstanding share
of common stock of Warner-Lambert. Customary and appropriate
provisions will be made for outstanding options and warrants. Based on
yesterday's closing market price, this offer represents a $96.40 per
share purchase price for each Warner-Lambert share, a premium of 30%
over the last month's average closing price of your shares. This $82.4
billion offer represents a very substantial premium over the proposed
AHP transaction as well. In addition, our proposal envisions combining
the Boards of both companies. Our offer is conditioned solely on the
elimination of the egregious $2 billion "break-up fee" and the
improper issuance of the stock option which would prevent us (but not
AHP) from utilizing a pooling of interest accounting for this
transaction as well as entering into the appropriate documentation.
The Pfizer Board has approved a transaction on the terms set forth
above and we are prepared to move expeditiously to definitive
agreements.
A transaction with us offers distinct advantages to Warner-Lambert and
its shareholders. Specific strengths of this combination include:
- The 30% premium for your shareholders over the average closing
price of your shares for the last month
- Enhanced, truly global scale -- including $4 billion in combined
R&D and $28 billion in combined revenues
- Complementary and broadly-diversified therapeutic pipelines
- The opportunity to achieve at least $1.2 billion in cost savings
and efficiencies
- Complementary operations on which to build growth -- including
Warner-Lambert's strong OTC platform and Pfizer's powerful global
marketing and sales infrastructure
- Opportunities to expand on our current highly successful
relationship
- Greater growth opportunities for management and key employees
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<PAGE> 19
Given the demands of today's competitive environment, I hope that
Warner-Lambert would settle for nothing less than a combination with
the best possible peer: Pfizer.
Given what we could accomplish together for all our most important
constituencies, we remain surprised that you have not shown more
interest in joining forces. Nevertheless, we stand ready to meet at
any time to discuss any -- or all -- aspects of our proposed
transaction.
On behalf of your shareholders, employees and all of your
constituencies, we urge you and Warner-Lambert's Board of Directors to
recognize the immediate and long-term superior value of this
transaction.
Sincerely,
/s/ William C. Steere, Jr.
Chairman & CEO
cc: Warner-Lambert Board of Directors
In addition, on November 4, 1999, Pfizer announced that it had commenced a
legal action in the Delaware Court of Chancery against Warner-Lambert,
Warner-Lambert's directors and American Home seeking to enjoin the approximately
$2.0 billion termination fee and the stock option granted by Warner-Lambert to
American Home to acquire 14.9% of Warner-Lambert's common stock as part of their
merger agreement. The lawsuit charges that the termination fee and stock option
are illegal and invalid, that Warner-Lambert's directors breached their
fiduciary duties to their stockholders by entering into the merger agreement
with American Home without informing themselves of the proposal Pfizer was
prepared to make and by approving the termination fee and stock option. The
legal action also alleges that American Home aided and abetted that breach of
fiduciary duty.
On November 5, 1999, in published press reports, Warner-Lambert explicitly
rejected Pfizer's proposal and reaffirmed its commitment to its announced
business combination with American Home.
On November 9, 1999, Mr. de Vink sent a letter to the Pfizer Board in which
he expressed Warner-Lambert's disappointment at what he perceived to be Pfizer's
efforts to take over Warner-Lambert as well as Pfizer's lawsuit against
Warner-Lambert. In the letter, he stated Warner-Lambert's belief that the
litigation was not in the best interest of either company's stockholders,
especially in light of their co-promotion of Lipitor, and was causing
uncertainty in the financial markets. Mr. de Vink stated that Warner-Lambert was
very comfortable with the conduct of its directors and was prepared to respond
to Pfizer in the courts. Further, the letter stated that Warner-Lambert remained
committed to the American Home transaction and wanted to resolve the legal
issues quickly. Mr. de Vink concluded by asking Pfizer to commit to moving the
proceeding along as promptly as possible.
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<PAGE> 20
On November 12, 1999, Mr. Steere sent the following letter, in response to
Mr. de Vink's November 9th letter, to Mr. de Vink and the Warner-Lambert Board:
November 12, 1999
Mr. Lodewijk de Vink
Chairman and CEO
Warner-Lambert Co.
201 Tabor Road
Morris Plains, NJ 07950
Dear Lodewijk:
The management and employees of our respective companies have worked
well together on many collaborative projects. In particular, our
Lipitor partnership is a model for our industry, and we are in full
agreement with the sentiments expressed in your letter of November 9
that it is "a very important venture for both of us."
However, the fact that you and your Board refused to give Pfizer the
opportunity to make a superior proposal to a merger you were
negotiating with American Home Products was, and continues to be, very
troubling. It is the view of Pfizer's Board of Directors and our
management team that a strategic combination of our two companies,
unequivocally the two fastest growing companies in our industry, is a
unique opportunity for your shareholders and merits careful
consideration by your company and your shareholders.
We are committed to completing a merger with Warner-Lambert, and we
continue to believe that it can, and should, be done in the spirit of
our partnership. To that end, we are prepared to negotiate a merger
agreement in substantially the form you entered into with AHP.
The economic terms of our proposed agreement are superior to the
American Home Products agreement.
We also will eliminate the coercive provisions of the AHP agreement,
and, of course, we will have no mass tort litigation contingency as in
the American Home Products merger agreement.
Our Agreement would:
- Provide a premium to your shareholders compared to the American
Home transaction;
- Provide for no breakup fee;
- Provide for no "poison pooling stock option;"
- Permit you to redeem your Poison Pill in the best interest of
your shareholders; and
- Will not contain an unreasonably long lock-up period.
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<PAGE> 21
I am always available to discuss this transaction with you.
Sincerely,
/s/ William C. Steere, Jr.
Chairman & CEO
cc: Warner-Lambert Board of Directors
As of this time, Pfizer has not received any response to its November 12th
letter.
WHY THE WARNER-LAMBERT STOCKHOLDERS SHOULD CHOOSE PFIZER
The current Warner-Lambert Board has approved a merger agreement with
American Home which provides less current value to the Warner-Lambert
stockholders than the Pfizer merger proposal and which Pfizer believes is not in
the best long-term interest of the Warner-Lambert stockholders. Pfizer's offer
is % higher than the American Home offer as of the close of trading on
November , 1999, and in the opinion of the Pfizer Board, a combination of
Pfizer and Warner-Lambert is more favorable to the Warner-Lambert stockholders
in the future based on the financial, operational, R&D and marketing resources
of Pfizer compared to American Home. Pfizer has a market capitalization that is
80% greater than American Home and Pfizer's three-year average revenue growth
rate for continuing operations is 289% greater than American Home's. The Pfizer
Board also believes that American Home's recent proposed settlement of the class
action litigation caused by its diet drug known as "fen-phen", for which
American Home took a pre-tax charge of $4.75 billion in the third quarter of
1999, may be a significant drain on American Home's financial resources. Also,
Pfizer's credit rating is one of the strongest in the industry and is superior
to that of American Home. Finally, Pfizer's international marketing strength is
superior in the view of most industry analysts to that of American Home and will
greatly enhance Warner-Lambert's foreign sales efforts. In short, Pfizer
believes there is no doubt that its proposed Merger with Warner-Lambert provides
the Warner-Lambert stockholders with substantially greater value than the
proposed merger between American Home and Warner-Lambert.
OUR REASONS FOR THE MERGER; RECOMMENDATIONS OF OUR BOARDS OF DIRECTORS
PFIZER
The Pfizer Board has authorized proceeding with the proposed Merger and
believe it is in the best interest of Pfizer and its stockholders. The Pfizer
Board expects to receive an opinion from its financial advisors, Lazard Freres &
Co., LLC and Merrill Lynch & Co., that the exchange ratio in the proposed Merger
is fair, from a financial point of view, to Pfizer.
Pfizer has proposed a merger between Pfizer and Warner-Lambert in which the
Warner-Lambert stockholders would receive 2.5 shares of Pfizer common stock for
each share of Warner-Lambert common stock that you own. As of the close of
trading on the New York Stock Exchange on November 12, 1999 the Merger is valued
at $75,055,414,368.75 or $87.8125 per share. A business combination between
Pfizer and Warner-Lambert would create the largest, fastest-growing,
pharmaceutical company in the world, and, the Pfizer Board believes, will
provide the greatest possible value to Warner-Lambert stockholders in both the
short and the long term. The combined company would
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<PAGE> 22
have revenues of approximately $28 billion, an annual research and development
("R&D") budget of approximately $4 billion and would expect it to achieve at
least $1.2 billion in annual cost savings and efficiencies, with future
leveraging of the combined infrastructure, by 2002. A partnership between Pfizer
and Warner-Lambert would also have complementary operations on which to build
growth, including Warner-Lambert's strong over-the-counter platform and Pfizer's
extensive marketing and sales infrastructure.
The current Warner-Lambert Board could have reviewed our proposal at the
same time they were reviewing the American Home transaction. At least a week
before the Warner-Lambert Board approved the merger with American Home, Pfizer
had made it very clear to Mr. de Vink that Pfizer was prepared to propose a
business combination between Pfizer and Warner-Lambert that would provide
Warner-Lambert's stockholders with superior value. The current Warner-Lambert
Board refused to even grant Pfizer permission to make a proposal and proceeded
to approve the merger agreement with American Home in which, among other things,
American Home is entitled to a termination fee of approximately $2.0 billion and
a 14.9% stock option which is designed to preclude pooling-of-interest
accounting for any other potential acquiror of Warner-Lambert other than
American Home.
The Pfizer lawsuit against the current Warner-Lambert Board is designed to
eliminate certain provisions in the merger agreement with American Home that the
Pfizer Board believes are designed to preclude any proposal other than the
American Home proposal and which prevent the Warner-Lambert stockholders from
considering the best transaction.
In reaching its determination to approve the proposed Merger Agreement and
recommend approval of the Stock Issuance Proposal to Pfizer's stockholders, the
Pfizer Board will consider and weigh the information presented to it by Pfizer's
management, as well as Pfizer's professional advisors, and weigh the positive
and countervailing factors associated with the transaction. The factors
considered and to be considered by the Pfizer Board include without limitation:
- The Financial, Marketing and R&D Strength of the Combined
Company. Pfizer and Warner-Lambert are the two fastest growing major
pharmaceutical companies in the world. The combined company would have
consolidated annual pharmaceutical revenues of approximately $28 billion
in 1999, with annual sales of more than $1 billion for seven individual
products. In addition a combined Pfizer/Warner-Lambert would have 15
products with sales in excess of $500 million for 1999, 12 of which would
have annual growth of 10% of more, more than double its closest industry
competitor.
Most of the major products of both Pfizer and Warner-Lambert will
continue to have patent protection well into the next decade. The
earnings per-share growth of both Pfizer and Warner-Lambert are at the
top of the major pharmaceutical companies. Pfizer's and Warner-Lambert's
selling, information and administrative expense ratio is among the
highest for major pharmaceutical companies and provides the opportunity
to support the combined growth of products from both the Pfizer and
Warner-Lambert pipelines of new products, as well as organic and
geographic growth of present products, with little additional investment.
With a combined marketing and manufacturing platform second-to-none in the
industry, the combined Pfizer/Warner-Lambert is poised for substantial
future growth. The combined R&D resources of the two companies would sustain
the combined
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<PAGE> 23
company as a formidable industry leader into the foreseeable future with a
current R&D budget of approximately $4 billion. Pfizer's own strong pipeline
of near term products and early research candidates along with an array of
potential products from Warner-Lambert will, in the opinion of Pfizer's
management, continue the combined company as the industry leader in new and
innovative products. Warner-Lambert has a leading position in the
over-the-counter ("OTC") drug business with substantial experience in
converting prescription products to over-the-counter. Pfizer's and
Warner-Lambert's OTC businesses are complementary and will be a superior
platform for converting prescription products to over-the-counter for the
combined company.
The financial performance of the combined company would clearly reflect its
industry leadership position with anticipated results on a pro forma basis
giving full effect to the anticipated synergies as set forth below:
<TABLE>
<CAPTION>
WARNER-
PFIZER LAMBERT COMBINED
------ -------------- --------
<S> <C> <C> <C>
Return on Equity............................... 35% 40% 43%
Return on Assets............................... 24% 25% 29%
EPS Growth (1999-2002)......................... 20% 19% 24%
</TABLE>
- Opportunities for Cost Savings and Efficiencies. The Pfizer Board will
consider that Pfizer, together with Warner-Lambert, is expected to
increase its profitability through cost savings and operating
efficiencies resulting from the elimination of certain redundant
facilities and functions which would exist in the combined company in the
United States, as well as in multiple organizations in over thirty
foreign countries; systems that can be integrated into Pfizer's
centralized systems, as well as merging R&D infrastructure. Pfizer's
management advised the Pfizer Board that a review of Warner-Lambert's
current cost structure available from public information indicated that
the amount of such cost savings and efficiencies to the combined company
is estimated to be at least $1.2 billion annually by 2002. Pfizer
estimates that savings from cost of goods sold will be realized by, among
other things, consolidation of over 100 manufacturing facilities. Savings
from sales, general and administrative expenses are expected to be
realized by the combination of two worldwide headquarters and multiple
organizations in over 30 countries. After the Merger, Pfizer will have a
combined R&D budget of $4 billion per year, the largest budget in the
industry. In addition to the competitive advantage gained by the size of
the R&D budget, the combination of the R&D programs will permit the
combined company to leverage the best science, research and procedures of
each program. Pfizer's R&D expenditures have been growing by an average
21.2% per year over the last 3 years.
- Complementary Nature of Businesses and Culture. The Pfizer Board will
consider the complementary nature of Warner-Lambert's operations and
management culture with that of Pfizer. The Pfizer Board will also
consider the strategic business combination of two leading pharmaceutical
companies and focus on Warner-Lambert's complementary pipeline of
research products, significant over-the-counter business, research and
development profile and market presence in all of the world's major
markets.
- Structure of the Merger; Terms of the Merger Agreement. The Pfizer Board
will consider the terms of the proposed Merger and its legal and tax
implications. The
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<PAGE> 24
Pfizer Board also will consider that the Merger is expected to be
accounted for as a pooling-of-interests transaction and that the Merger
generally is not expected to result in federal income taxes. The Pfizer
Board also will consider the fact that the exchange ratio is a fixed
number and will not be adjusted in the event that there are any increases
or decreases in the price of either Pfizer's common stock or
Warner-Lambert common stock.
- Opinions of Financial Advisors. The Pfizer Board will consider the
presentation of and on November , 1999,
and the written opinion delivered by as of November ,
1999 that as of such date, the exchange ratio was fair, from a financial
point of view, to Pfizer. See "Opinions of Financial Advisors." A copy of
's written opinion, which sets forth the assumptions made,
matters considered and limitations on the review undertaken, will be
attached as an exhibit to this Joint Proxy Statement/Prospectus and is
incorporated herein by reference.
The foregoing discussion of the information and factors to be considered by
the Pfizer Board includes all material factors. In reaching the determination to
approve the proposed Merger Agreement and recommend approval of the Stock
Issuance Proposal, the Pfizer Board is expected to conclude that the potential
benefits of the Merger outweigh the potential risks, but not to assign any
relative or specific weights to the foregoing factors, and individual directors
may give differing weights to the different factors. The Pfizer Board will not
attempt to analyze the fairness of the exchange ratio in isolation from the
considerations as to the businesses of Pfizer and Warner-Lambert, the strategic
merits of the proposed Merger or the other considerations referred to above. The
Pfizer Board is expected to take into account, and place reliance upon, the
analyses performed by, and the opinion to be rendered by, and
as to the fairness, from a financial point of view, of the
exchange ratio to Pfizer.
IT IS EXPECTED THAT THE PFIZER BOARD WILL APPROVE THE PROPOSED MERGER AND
THE TRANSACTION CONTEMPLATED THEREBY AND BELIEVES THAT THE TERMS OF THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, PFIZER AND ITS STOCKHOLDERS. THE
PFIZER BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK ISSUANCE PROPOSAL.
WARNER-LAMBERT
[TO COME.]
ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling-of-interests. The
pooling-of-interests method of accounting assumes that the combining companies
had been merged from inception, and the historical financial statements for
periods prior to consummation of the Merger are restated as though the companies
had been combined from inception as required under United States Generally
Accepted Accounting Principles. It is a condition to the Merger that: (i) Pfizer
shall have received a letter from KPMG LLP, New York, New York, independent
accountants for Pfizer, dated as of the date on which the transactions
contemplated by the Merger Agreement are consummated, regarding their
concurrence with Pfizer management's conclusion that no condition exists that
would preclude Pfizer's accounting for the Merger as a pooling-of-interests if
the Merger is closed
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<PAGE> 25
and consummated in accordance with the Merger Agreement; and (ii) Warner-Lambert
shall have received a letter from PricewaterhouseCoopers LLP, Florham Park, New
Jersey, independent accountants for Warner-Lambert, dated as of the date on
which the transactions contemplated by the Merger Agreement are consummated
regarding their concurrence with Warner-Lambert's management that no condition
exists that would preclude Warner-Lambert's accounting for the Merger as a
pooling-of-interests, if the Merger is consummated in accordance with the Merger
Agreement.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the opinions that would be delivered at
the closing of the Merger, of counsel to Pfizer and Warner-Lambert as to the
material United States federal income tax consequences of the Merger. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury regulations, administrative interpretations and
court decisions as in effect as of the date of this Joint Proxy
Statement/Prospectus, all of which are subject to change, possibly with
retroactive effect.
This discussion does not address all aspects of federal income taxation
that may be relevant to a stockholder of Warner-Lambert in light of that
stockholder's particular circumstances or to a stockholder subject to special
rules, such as:
- a stockholder that is not a citizen or resident of the United States,
- a financial institution or insurance company,
- a tax-exempt organization,
- a dealer or broker in securities,
- a stockholder that holds its Warner-Lambert common stock as part of a
hedge, appreciated financial position, straddle or conversion
transaction, or
- a stockholder that acquired its Warner-Lambert common stock pursuant to
the exercise of options or otherwise as compensation.
As a condition to the obligations of Pfizer and Warner-Lambert to complete
the Merger, each shall receive an opinion from its counsel, dated as of the
closing date of the Merger, that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and that each of Pfizer, Warner-Lambert and the Pfizer merger subsidiary
will be a party to the reorganization within the meaning of Section 368(b) of
the Code. Pfizer does not currently intend to waive these conditions.
In rendering these opinions, counsel will rely on representations and
covenants made by Pfizer, Warner-Lambert and/or others, including those
contained in certificates of officers of Pfizer and Warner-Lambert, as the case
may be. These opinions will also rely on assumptions, including assumptions
regarding the absence of changes in existing facts and the completion of the
Merger, as the case may be, in the manner contemplated by the Merger Agreement.
If any of those representations, covenants or assumptions are inaccurate,
counsel may not be able to render the required opinions and/or the tax
consequences of the Merger could differ from those discussed here. Opinions of
counsel neither bind the IRS nor preclude the IRS from adopting a contrary
position. Pfizer does not intend to obtain a ruling from the IRS on the tax
consequences of the Merger.
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<PAGE> 26
For federal income tax purposes:
- A holder of Warner-Lambert common stock will not recognize any gain or
loss upon its exchange of its shares of Warner-Lambert common stock for
shares of Pfizer common stock in the Merger, except with respect to cash
received instead of a fractional share of Pfizer common stock.
- To the extent that a holder of Warner-Lambert common stock receives cash
instead of a fractional share of Pfizer common stock, the holder will be
required to recognize gain or loss, measured by the difference between
the amount of cash received and the portion of the tax basis of that
holder's shares of Warner-Lambert common stock allocable to that
fractional share of Pfizer common stock. This gain or loss will be
capital gain or loss and will be long-term capital gain or loss if the
share of Warner-Lambert common stock exchanged for the fractional share
of Pfizer common stock was held for more than one year at the effective
time of the Merger.
- A holder of Warner-Lambert common stock will have a tax basis in the
Pfizer common stock received in the Merger equal to (1) the tax basis of
the Warner-Lambert common stock surrendered by that holder in the Merger,
less (2) any tax basis of the Warner-Lambert common stock surrendered
that is allocable to a fractional share of Pfizer common stock for which
cash is received.
- The holding period for shares of Pfizer common stock received in exchange
for shares of Warner-Lambert common stock in the Merger will include the
holding period for the shares of Warner-Lambert common stock surrendered
in the Merger.
This discussion of material federal income tax consequences is intended to
provide only a general summary of the proposed Merger, and is not a complete
analysis or description of all potential federal income tax consequences of the
Merger. This discussion does not address tax consequences that may vary with, or
are contingent on, individual circumstances. In addition, it does not address
any non-income tax or any foreign, state or local tax consequences of the
Merger. Accordingly, we urge each stockholder of Warner-Lambert to consult his
or her tax advisor to determine the particular United States federal, state or
local or foreign income or other tax consequences to that stockholder of the
Merger.
REGULATORY MATTERS RELATING TO THE MERGER
ANTITRUST REVIEW
Under the HSR Act and its associated rules, the Merger may not be
consummated until notifications have been given and certain information and
materials have been furnished to and reviewed by the Department of Justice
("DOJ") and the Federal Trade Commission ("FTC") and specified waiting period
requirements have been satisfied. As of this date Pfizer has not taken any
actions in connection with this requirement. In addition, at any time prior to
or after the consummation of the Merger, the DOJ or the FTC could take such
action under the federal antitrust laws as it deems necessary in the public
interest, including seeking to enjoin the Merger or seeking conditions thereon.
State antitrust authorities and private parties in certain circumstances may
bring legal action under the antitrust laws seeking to enjoin the Merger or
seeking conditions.
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<PAGE> 27
OTHER REGULATORY APPROVALS
Other than approval by the European Commission, Pfizer is not presently
aware of other regulatory approvals that would be required in connection with
the Merger. However, once Pfizer has had an opportunity to conduct further
discussions with Warner-Lambert, it is possible that it will learn of other
approval requirements. There can be no assurance that those additionally
required approvals, if any, will be obtained on a timely basis, or without
condition.
APPRAISAL RIGHTS
Holders of Pfizer common stock and Warner-Lambert common stock do not have
dissenters' appraisal rights under Delaware law in connection with the Merger.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTION AGREEMENTS
This Joint Proxy Statement/Prospectus does not cover any resales of the
Pfizer common stock to be received by the stockholders of Warner-Lambert upon
completion of the Merger, and no person is authorized to make any use of this
Joint Proxy Statement/ Prospectus in connection with any such resale.
All shares of Pfizer common stock received by Warner-Lambert stockholders
in the Merger will be freely transferable, except that shares of Pfizer common
stock received by persons who are deemed to be "affiliates" of Warner-Lambert
under the Securities Act of 1933, as amended, at the time of the Warner-Lambert
meeting may be resold by them only in transactions permitted by Rule 145 under
the 1933 Act or as otherwise permitted under the 1933 Act. Persons who may be
deemed to be affiliates of Warner-Lambert for such purposes generally include
individuals or entities that control, are controlled by or are under common
control with Warner-Lambert, as the case may be, and include directors and
executive officers of Warner-Lambert. The Merger Agreement requires that Warner-
Lambert use all reasonable efforts to cause each of such affiliates to execute a
written agreement to the effect that such persons will not offer, sell or
otherwise dispose of any of the shares of Pfizer common stock issued to them in
the Merger, as the case may be, in violation of the 1933 Act or the related SEC
rules.
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<PAGE> 28
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Pfizer common stock and Warner-Lambert common stock are each listed on the
New York Stock Exchange. Pfizer's and Warner-Lambert's ticker symbols are "PFE"
and "WLA," respectively. The following table shows, for the calendar quarters
indicated, based on published financial sources: (1) the high and low
last-reported closing prices per share of Pfizer and Warner-Lambert common stock
as reported on the New York Stock Exchange Composite Transaction Tape and (2)
the cash dividends per share of Pfizer and Warner-Lambert common stock.
<TABLE>
<CAPTION>
PFIZER COMMON STOCK* WARNER-LAMBERT COMMON STOCK**
------------------------------- ------------------------------
HIGH LOW DIVIDEND HIGH LOW DIVIDEND
-------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter.............. $ 16.500 $13.438 $0.056 $31.078 $23.172 $0.127
Second Quarter............. $ 20.521 $13.833 $0.056 $41.828 $27.875 $0.127
Third Quarter.............. $ 21.583 $17.021 $0.056 $49.078 $41.438 $0.127
Fourth Quarter............. $ 26.667 $19.813 $0.056 $50.875 $36.172 $0.127
1998
First Quarter.............. $ 32.500 $23.688 $0.063 $56.875 $39.375 $0.160
Second Quarter............. $ 40.583 $32.125 $0.063 $71.563 $55.000 $0.160
Third Quarter.............. $ 40.208 $30.667 $0.063 $85.938 $64.750 $0.160
Fourth Quarter............. $ 42.979 $28.667 $0.063 $82.000 $60.125 $0.160
1999
First Quarter.............. $ 48.167 $36.521 $0.073 $77.000 $63.500 $0.200
Second Quarter............. $ 50.042 $31.542 $0.073 $72.625 $61.000 $0.200
Third Quarter.............. $ 40.688 $32.000 $0.080 $73.500 $60.813 $0.200
Fourth Quarter (through
November 12)............. $ 42.250 $34.063 $93.938 $66.500
</TABLE>
- -------------------------
* Adjusted for a 3-for-1 stock split in June 1999.
** Adjusted for a 3-for-1 stock split in May 1998.
On November 3, 1999, the last full trading day before Pfizer publicly
announced its Merger proposal to Warner-Lambert, the last reported closing
prices per share of Pfizer and Warner-Lambert stock were $38.562 and $83.812,
respectively. On November 12, 1999, the most recent practicable date prior to
the filing of this Joint Proxy Statement/ Prospectus, the last reported closing
prices per share of Pfizer and Warner-Lambert stock were $35.125 and $93.625,
respectively. Stockholders are urged to obtain current market quotations prior
to making any decision with respect to the Merger.
The Merger Agreement prohibits Pfizer and Warner-Lambert from changing
their dividend policies before the Merger. The payment of dividends by the
combined company after the Merger, however, will depend on business conditions,
the combined company's financial condition and earnings, and other factors.
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<PAGE> 29
OPINIONS OF FINANCIAL ADVISORS
To come.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
To come.
I-23
<PAGE> 30
SEE CAUTIONARY NOTICE ON COVER PAGE
AS OF THE DATE OF FILING OF THIS JOINT PROXY STATEMENT/ PROSPECTUS NO MERGER
AGREEMENT HAS BEEN EXECUTED BETWEEN PFIZER AND WARNER-LAMBERT. THE FOLLOWING
DESCRIPTION DESCRIBES PROVISIONS IN PFIZER'S MERGER PROPOSAL TO WARNER-LAMBERT
THAT WOULD OCCUR IF AND ONLY IF THE TRANSACTION PROPOSED BY PFIZER TO
WARNER-LAMBERT ON NOVEMBER 4, 1999 WERE ACCEPTED IN ITS CURRENT FORM AND PFIZER
AND WARNER-LAMBERT ENTER INTO A CUSTOMARY MERGER AGREEMENT.
THE MERGER AGREEMENT
The following summary of the proposed Merger Agreement is qualified by
reference to the complete text of the Merger Agreement, which is incorporated by
reference and will be attached as Exhibit 2.1.
STRUCTURE OF THE MERGER
Under the Pfizer Merger Agreement, a merger subsidiary of Pfizer will merge
with and into Warner-Lambert so that Warner-Lambert becomes a wholly-owned
subsidiary of Pfizer.
TIMING OF CLOSING
The closing will occur on the first business day after the day on which the
last of the conditions set forth in the Merger Agreement has been satisfied or
waived (the "Effective Time").
MERGER CONSIDERATION
The Merger Agreement provides that each share of Warner-Lambert common
stock outstanding immediately prior to the Effective Time will, at the Effective
Time, be converted into the right to receive 2.5 shares of Pfizer common stock.
However, any shares of Warner-Lambert common stock held by Warner-Lambert as
treasury stock or any subsidiary of Warner-Lambert or owned by Pfizer or any
subsidiary of Pfizer will be canceled without any payment for those shares.
Shares held in Warner-Lambert's employee pension and compensation plans will be
deemed issued and outstanding and will not be treated as treasury stock for this
purpose.
TREATMENT OF WARNER-LAMBERT STOCK OPTIONS
Subject to the terms of the applicable stock option plan, at the Effective
Time, each outstanding option, warrant and other right granted by Warner-Lambert
to purchase shares of Warner-Lambert common stock will be converted into an
option, warrant or other right to acquire Pfizer common stock having the same
terms and conditions as the Warner-Lambert stock option, warrant or right had
before the Effective Time. The number of
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<PAGE> 31
shares that the new Pfizer option, warrant or right will be exercisable for and
the exercise price of the new Pfizer option, warrant or right will reflect the
exchange ratio in the Merger.
EXCHANGE OF SHARES
Pfizer will appoint an exchange agent to handle the exchange of
Warner-Lambert stock certificates in the Merger for Pfizer stock certificates
and the payment of cash for fractional shares of Warner-Lambert common stock.
Soon after the Effective Time, the exchange agent will send to each holder of
Warner-Lambert common stock a letter of transmittal for use in the exchange and
instructions explaining how to surrender Warner-Lambert stock certificates to
the exchange agent. Holders of Warner-Lambert stock that surrender their
certificates to the exchange agent, together with a properly completed letter of
transmittal, will receive the appropriate merger consideration. Holders of
unexchanged shares of Warner-Lambert common stock will not be entitled to
receive any dividends or other distributions payable by Pfizer after the
Effective Time until their certificates are surrendered.
Pfizer will not issue any fractional shares in the Merger. Instead, as
promptly as practicable following the Effective Time of the Merger, the exchange
agent will sell the "Excess Shares" of Pfizer common stock at then prevailing
prices on the New York Stock Exchange. "Excess Shares" means the number of
shares of Pfizer common stock delivered by Pfizer to the exchange agent over the
aggregate number of shares of Pfizer common stock to be distributed to
Warner-Lambert stockholders. Pfizer will pay the exchange agent an amount
sufficient for the exchange agent to pay each Warner-Lambert stockholder the
amount such holder would have received if the sale of Pfizer common stock was
made at a price equal to the closing price of the Pfizer common stock on the New
York Stock Exchange on the date of the Effective Time. As soon as practicable
after the determination of the amount of cash to be paid to Warner-Lambert
stockholders with respect to any fractional share interests, holders of
Warner-Lambert common stock will receive a cash payment equal to the value of
their fractional shares.
PFIZER BOARD
Following the Merger, the Board of Directors of Pfizer will have [ ]
members, including all of the current Pfizer directors and [ ] directors
designated by Warner-Lambert.
CERTAIN COVENANTS
Each of Pfizer and Warner-Lambert will undertake certain covenants in the
Merger Agreement. The following summarizes the more significant of these
covenants.
No Solicitation. Warner-Lambert and Pfizer will agree that they and their
subsidiaries and their officers, directors, employees and advisers will not take
action to solicit or encourage an offer for an alternative acquisition
transaction involving Warner-Lambert or Pfizer of a nature defined in the Merger
Agreement.
Restricted actions include engaging in discussions or negotiations with any
potential bidder, or furnishing information relating to either party or its
subsidiaries to a potential bidder. These actions are permitted in response to
an unsolicited offer so long as such
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<PAGE> 32
unsolicited offer is made prior to the time that the Warner-Lambert or Pfizer
stockholder approval, as the case may be, is obtained and so long as prior to
doing so:
- the Warner-Lambert or Pfizer Board, as the case may be, determines in its
good faith judgment that it is reasonably likely, after receiving advice
from an independent investment bank that such unsolicited offer is likely
to result in a superior proposal for the stockholders of the company; and
- Warner-Lambert or Pfizer, as the case may be, receives from such
potential bidder an executed confidentiality agreement with terms
substantially similar to such terms contained in the existing
confidentiality agreement between Warner-Lambert and Pfizer.
Each of Warner-Lambert and Pfizer will keep the other reasonably informed
of the status and details of any offer.
Warner-Lambert Board's Covenant to Recommend. The Warner-Lambert Board
will agree to recommend the approval and adoption of the Merger Agreement to
Warner-Lambert's stockholders. However, the Warner-Lambert Board will be
permitted to withdraw, modify or qualify this recommendation in a manner adverse
to Pfizer if the Warner-Lambert Board determines in its good faith judgment that
an unsolicited proposal it has received is a superior offer for its
stockholders, and Warner-Lambert's Board has given Pfizer five business days to
amend its offer to the extent necessary to permit Warner-Lambert's Board to
recommend the transaction to its stockholders in compliance with such fiduciary
duty.
Pfizer Board's Covenant to Recommend. The Pfizer Board will agree to
recommend to Pfizer's stockholders the approval of the issuance of Pfizer stock
in the Pfizer merger. However, the Pfizer Board will be permitted to withdraw,
modify or qualify this recommendation in a manner adverse to Warner-Lambert if
the Pfizer Board determines in its good faith judgment that an unsolicited
proposal it has received is a superior offer for its stockholders, and Pfizer's
Board has given Warner-Lambert five business days to amend its offer to the
extent necessary to permit Pfizer's Board to recommend the transaction to its
stockholders in compliance with such fiduciary duty.
Interim Operations of Pfizer and Warner-Lambert. Pfizer and Warner-Lambert
will be required to conduct their business in the ordinary course consistent
with past practice until the effective time and, subject to certain exceptions,
will not engage in certain material transactions during this period such as
material acquisitions or dispositions and issuances or repurchases of stock.
Cooperation Covenant. Pfizer and Warner-Lambert will agree to cooperate
with each other and use their reasonable best efforts to take all actions and do
all things necessary or advisable under the Merger Agreement and applicable laws
to complete the Merger and the other transactions contemplated by the Merger
Agreement.
Employee Benefits Matters. Except as may be otherwise agreed between
Pfizer and Warner-Lambert, Pfizer will have an obligation after the Effective
Time to maintain the Warner-Lambert employee benefit plans as separate from the
Pfizer employee benefit plans for a period of no longer than one year from the
effective time.
Pooling; Tax-Free Qualification. Pfizer and Warner-Lambert shall use their
reasonable best efforts not to, nor permit any of their subsidiaries to, take
any action that would
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<PAGE> 33
prevent or impede the Merger from qualifying as a pooling-of-interests for
accounting purposes or as a "reorganization" for tax purposes.
Indemnification and Insurance of Pfizer and Warner-Lambert Directors and
Officers. The Merger Agreement provides that for six years after the Effective
Time:
- Warner-Lambert and Pfizer shall maintain in effect the current provisions
regarding indemnification of officers and directors contained in the
respective charter and by-laws of Warner-Lambert and Pfizer and each of
their respective subsidiaries and any director, officer or employee
indemnification agreements of Warner-Lambert and Pfizer and their
respective subsidiaries;
- Warner-Lambert and Pfizer shall maintain in effect the current policies
of directors' and officers' liability insurance and fiduciary liability
insurance maintained by Warner-Lambert and Pfizer, respectively, (except
that Pfizer may substitute policies which are, in the aggregate, no less
advantageous to the insureds in any material respect) with respect to
claims arising from facts or events which occurred on or before the
Effective Time; and
- Warner-Lambert and Pfizer shall indemnify the directors and officers of
Warner-Lambert and Pfizer, respectively, to the fullest extent to which
each is permitted to indemnify such officers and directors under its
respective charters and by-laws and applicable law.
Certain Other Covenants. The Merger Agreement contains mutual covenants of
the parties typical for a transaction involving a strategic merger.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains substantially reciprocal representations and
warranties made by Pfizer and Warner-Lambert customary for a merger of this
nature.
The representations and warranties in the Merger Agreement do not survive
the closing or termination of the Merger Agreement.
CONDITIONS TO THE COMPLETION OF THE MERGER
Mutual Closing Conditions. The obligations of Pfizer and Warner-Lambert to
complete the Merger will be subject to the satisfaction or, to the extent
legally permissible, waiver of the following conditions:
- approval by the Pfizer and Warner-Lambert stockholders;
- expiration of the HSR Act waiting period and approval of the Merger by
the European Commission;
- receipt of all required regulatory approvals or permits for completion of
the Merger other than those the failure of which to obtain would not have
a material adverse effect;
- receipt by Pfizer and Warner-Lambert of material consents or approvals
from any person required for completion of the Merger;
- absence of a legal prohibition on completion of the Merger;
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<PAGE> 34
- Pfizer's registration statement on Form S-4, which includes this Joint
Proxy Statement/Prospectus, being effective and not subject to any stop
order by the SEC;
- approval for the listing on the New York Stock Exchange of the shares of
Pfizer common stock to be issued in the Merger;
- receipt by Pfizer and Warner-Lambert of opinions from their respective
counsel that the Merger will qualify as a tax-free reorganization;
- receipt by Pfizer and Warner-Lambert of letters from the other party's
independent public accountants stating that no conditions exist that
would preclude the Merger from being accounted for as a
pooling-of-interests;
- accuracy as of closing of the representations and warranties made by the
other party to the extent specified in the Merger Agreement; and
- performance in all material respects by the other party of the
obligations and covenants required to be performed by it at or prior to
closing.
TERMINATION OF THE MERGER AGREEMENT
Right to Terminate. The Merger Agreement will be terminable at any time
prior to the effective time in any of the following ways:
(a) The Merger Agreement may be terminated by mutual written consent of
Pfizer and Warner-Lambert;
(b) either Pfizer or Warner-Lambert can terminate the Merger Agreement if
any of the following occurs:
- the Merger has not been completed by May 15, 2000, unless the failure
to complete the Merger is a result of either Pfizer's or
Warner-Lambert's failure to fulfill any material obligations under the
Merger Agreement;
- there is a permanent legal prohibition to closing the Merger;
- Pfizer or Warner-Lambert stockholders fail to give the necessary
approval at a duly held meeting;
- either Pfizer's or Warner-Lambert's Board fails to recommend the
Merger or withdraws, modifies or qualifies in any adverse manner its
approval or recommendation of the Merger, or recommends a superior
offer; or
- Pfizer or Warner-Lambert has materially breached its obligations under
the agreement by reason of a failure to call a stockholder's meeting.
If the Merger Agreement is validly terminated, the Merger Agreement will
become void without any liability on the part of any party unless such party is
in willful breach thereof. However, the provisions of the Merger Agreement
relating to expenses and the confidentiality agreement entered into between
Pfizer and Warner-Lambert, will continue in effect notwithstanding termination
of the Merger Agreement.
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<PAGE> 35
OTHER EXPENSES
Except as described in the Merger Agreement, all costs and expenses
incurred in connection with the Merger Agreement and related transactions will
be paid by the party incurring such costs or expenses. Certain expenses incurred
in connection with the printing of the Joint Proxy Statement/Prospectus and
certain filing fees will be shared equally by Pfizer and Warner-Lambert.
AMENDMENTS AND WAIVERS
Amendments. Any provision of the Merger Agreement may be amended prior to
the Effective Time if the amendment is in writing and signed by Pfizer and
Warner-Lambert. After the approval of the Merger Agreement by the stockholders
of either Pfizer or Warner-Lambert, no amendment may be made which requires
further approval by such stockholders without such approval.
Waiver. At any time before the Effective Time, by a waiver in writing and
signed by the party against whom the waiver is to be effective, any party may:
- extend the time for the performance of any of the obligations or other
acts of the other party;
- waive any inaccuracies in the representations and warranties contained in
any document delivered in connection with the transaction; or
- waive compliance with any of the agreements of conditions contained
therein.
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<PAGE> 36
SECTION TWO
SELECTED FINANCIAL DATA
The following tables show financial results actually achieved by each of
Pfizer and Warner-Lambert ("historical" amounts) and also show results as if the
companies had been combined for the periods shown (the "pro forma combined"
amounts).
Pfizer's annual historical amounts are derived from financial statements
audited by KPMG LLP and Warner-Lambert's annual historical amounts are derived
from financial statements audited by PricewaterhouseCoopers LLP as of and for
the years ended December 31, 1994 through 1998. Historical earnings per share
data reflect the adoption in 1997 of SFAS No. 128 "Earnings per Share." Prior
periods have been restated. Amounts as of and for the nine-month and six-month
periods presented are unaudited, but management of Pfizer and Warner-Lambert
each believes that its own interim period figures reflect all normal recurring
adjustments necessary for a fair presentation of the financial position and
results of operations for those periods. You should not assume that the results
for the first six and nine month periods of 1999 are indicative of results for
any future period.
The pro forma income statement information is derived from the Unaudited
Pro Forma Condensed Combined Statements of Income appearing elsewhere herein,
which gives effect to the Merger as a pooling-of-interests as if the Merger had
been consummated at the beginning of the earliest period presented.
You should not assume that Pfizer and Warner-Lambert would have achieved
the combined pro forma results if they had actually been combined during the
periods shown. The information set forth below should be read in conjunction
with the historical Consolidated Financial Statements of Pfizer and
Warner-Lambert and the Unaudited Pro Forma Condensed Combined Financial
Statements, including the notes thereto, included in this Joint Proxy
Statement/Prospectus.
II-1
<PAGE> 37
CONDENSED CONSOLIDATED FINANCIAL DATA OF
PFIZER INC. AND SUBSIDIARIES -- HISTORICAL
<TABLE>
<CAPTION>
AS OF AND FOR THE
---------------------------------------------------------------------------------------------------
NINE MONTHS ENDED* SIX MONTHS ENDED*
YEAR ENDED DECEMBER 31, -------------------------- --------------------
----------------------------------------------- OCTOBER 3, SEPTEMBER 27, JULY 4, JUNE 28,
1998 1997 1996 1995 1994 1999 1998 1999 1998
------- ------- ------- ------- ------- ---------- ------------- ------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................... $12,677 10,739 9,864 8,684 6,825 10,245 9,110 6,823 6,000
Alliance revenue............ 867 316 -- -- -- 1,452 568 883 348
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues.............. 13,544 11,055 9,864 8,684 6,825 11,697 9,678 7,706 6,348
Research and development.... 2,279 1,805 1,567 1,340 1,036 2,016 1,581 1,322 1,031
Other costs and expenses.... 8,671 6,383 5,769 5,327 4,212 6,537 5,809 4,207 3,731
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from continuing
operations before taxes
and minority interests.... 2,594 2,867 2,528 2,017 1,577 3,144 2,288 2,177 1,586
Provision for taxes......... 642 775 758 609 445 896 641 631 455
Income from continuing
operations................ $ 1,950 2,082 1,764 1,401 1,127 2,245 1,644 1,544 1,129
Discontinued
operations -- net of
tax....................... 1,401 131 165 172 171 (20) 1,073 (20) 191
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income.................. $ 3,351 2,213 1,929 1,573 1,298 2,225 2,717 1,524 1,320
======= ======= ======= ======= ======= ======= ======= ======= =======
Depreciation................ $ 420 363 309 277 236 337 323 223 201
Property, plant and
equipment additions....... 1,198 878 690 635 620 1,104 813 687 461
Cash dividends paid......... 976 881 771 659 594 851 741 566 491
Working capital............. $ 2,739 2,448 1,914 1,787 1,582 2,392 2,615 2,341 2,644
Property, plant and
equipment -- net.......... 4,415 3,793 3,456 3,113 2,747 5,059 4,115 4,738 3,960
Total assets................ 18,302 14,991 14,251 12,339 10,797 20,239 18,177 19,640 16,312
Long-term debt.............. 527 725 681 828 604 525 528 530 724
Long-term capital(1)........ 9,551 8,819 7,907 6,518 5,150 9,603 9,634 9,385 9,157
Shareholders' equity........ 8,810 7,933 6,954 5,506 4,324 8,786 8,645 8,651 8,305
Per common share data:(2)
Basic:
Income from continuing
operations............ $ .51 .55 .47 .38 .31 .60 .43 .41 .30
Discontinued
operations -- net of
tax................... .37 .04 .05 .05 .04 (.01) .29 (.01) .05
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income.............. $ .88 .59 .52 .43 .35 .59 .72 .40 .35
======= ======= ======= ======= ======= ======= ======= ======= =======
Diluted:
Income from continuing
operations............ $ .49 .53 .46 .37 .30 .57 .42 .39 .29
Discontinued
operations -- net of
tax................... .36 .04 .04 .05 .05 -- .27 -- .04
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income.............. $ .85 .57 .50 .42 .35 .57 .69 .39 .33
======= ======= ======= ======= ======= ======= ======= ======= =======
Cash dividends paid per
share(2).................. $ .25 1/3 .22 2/3 .20 .17 1/3 .15 2/3 .22 2/3 .19 .14 2/3 .12 2/3
Weighted average shares used
to calculate(2):
Basic earnings per share
amounts................. 3,789 3,771 3,743 3,687 3,670 3,778 3,791 3,781 3,790
Diluted earnings per share
amounts................. 3,945 3,909 3,864 3,777 3,729 3,912 3,950 3,922 3,952
</TABLE>
- ---------------
(1) Defined as long-term debt, deferred taxes on income, minority interests and
shareholders' equity.
(2) Shares and per share data reflect the 3-for-1 stock split which occurred in
June 1999.
* Unaudited.
II-2
<PAGE> 38
CONDENSED CONSOLIDATED FINANCIAL DATA OF
WARNER-LAMBERT COMPANY -- HISTORICAL
<TABLE>
<CAPTION>
AS OF AND FOR THE
----------------------------------------------------------------------------------
NINE MONTHS SIX MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,** JUNE 30,**
------------------------------------------- ---------------- ---------------
1998 1997 1996 1995* 1994* 1999 1998 1999 1998
------- ----- ----- ----- ----- ------ ------ ------ -----
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............................... $10,799 8,476 7,299 7,040 6,417 6,157 5,014
Cost of goods sold...................... 2,861 2,504 2,347 2,428 2,155 1,476 1,361
Selling, general and administrative..... 4,857 3,726 3,131 3,044 2,795 2,813 2,211
Research and development................ 1,047 785 652 501 456 556 469
Other expense (income) -- net........... 243 272 31 (82) 6 145 96
------- ----- ----- ----- ----- ----- ----- ------ -----
Income before taxes and minority
interests............................. 1,791 1,189 1,138 1,149 1,005 1,167 877
Provision for taxes..................... 518 327 322 279 219 338 255
Minority interests...................... 69 130 92
------- ----- ----- ----- ----- ----- ----- ------ -----
Net income.............................. $ 1,273 862 747 740 694 829 622
======= ===== ===== ===== ===== ===== ===== ====== =====
Depreciation and amortization........... $ 296* 275* 231* 202 181 169 146
Property, plant and equipment
additions............................. 721* 495* 389* 387 406 416 264
Cash dividends paid..................... 525* 413* 374* 351 327 329 262
Working capital......................... $ 1,005 760* 648* 353 162 1,753 650*
Property, plant and equipment -- net.... $ 2,822 2,427* 2,168* 2,006 1,846 3,007 2,423*
Total assets............................ 9,623 8,031* 7,197* 6,101 5,533 10,326 8,292*
Long-term debt.......................... 1,267 1,831* 1,720* 634 535 1,636 1,357*
Total debt.............................. 1,531 2,203* 2,300* 1,529 1,460 1,833 1,886*
Shareholders' equity.................... 3,880 2,836* 2,581* 2,246 1,816 4,228 3,177*
Per common share data(1):
Basic................................. $ 1.50 1.03 .89 .91 .86 .97 .73
Diluted............................... $ 1.45 .99 .88 .90 .86 .94 .71
Cash dividends paid per share(1)........ $ .64 .51 .46 .43 .41 .40 .32
Weighted average shares used to
calculate(1):
Basic earnings per share amounts...... 847 841 834 810 805 852 846
Diluted earnings per share amounts.... 879 868 850 818 810 882 876
</TABLE>
- -------------------------
* Amounts not restated to reflect acquisition of Agouron Pharmaceuticals, Inc.
in May 1999.
** Unaudited.
(1) Shares and per share data reflect the 3-for-1 stock split which occurred in
May 1998.
II-3
<PAGE> 39
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA OF
PFIZER AND WARNER-LAMBERT
<TABLE>
<CAPTION>
AS OF AND FOR THE
---------------------------------------------------------------------------
NINE MONTHS SIX MONTHS
ENDED ENDED
YEAR ENDED DECEMBER 31, -------------------------- ------------------
------------------------- OCTOBER 3, SEPTEMBER 27, JULY 4, JUNE 28,
1998 1997 1996 1999 1998 1999 1998
------- ------ ------ ---------- ------------- ------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues............... $23,545 19,214 17,163 13,248 11,040
Income from continuing
operations................. $ 3,232 2,929 2,425 2,379 1,755
Per Share Data:
Income from continuing
operations:
Basic...................... $ .55 .50 .42 .40 .30
Diluted.................... $ .53 .48 .40 .39 .29
Cash dividends paid per
share*..................... $ .25 1/3 .22 2/3 .20 .14 2/3 .12 2/3
Total assets................. $27,512 29,487
Long-term debt............... $ 1,794 2,166
</TABLE>
- ------------------------
* Amounts reflect Pfizer's historical dividend rate per common share.
II-4
<PAGE> 40
COMPARATIVE PER SHARE DATA OF PFIZER AND WARNER-LAMBERT
<TABLE>
<CAPTION>
AS OF AND FOR THE
------------------------------------------------------------------------------
NINE MONTHS
YEAR ENDED ENDED** SIX MONTHS ENDED**
DECEMBER 31, ---------------------------- --------------------
------------------------ OCTOBER 3, SEPTEMBER 27, JULY 4, JUNE 28,
1998 1997 1996 1999 1998 1999 1998
----- ---- ----- ---------- ------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PFIZER PRO FORMA COMBINED
Per share data:
Basic:
Income from continuing
operations...................... $ .55 .50 .42 .40 .30
Diluted:
Income from continuing
operations...................... $ .53 .48 .40 .39 .29
Cash dividends paid*................. $ .25 1/3 .22 2/3 .20 .14 2/3 .12 2/3
Shareholders' equity................. $2.09 2.13
Ratio of earnings to fixed charges..... 13.1x 11.1x 9.9x 16.4x
PFIZER HISTORICAL
Per share data(1):
Basic:
Income from continuing
operations...................... $ .51 .55 .47 .60 .43 .41 .30
Diluted:
Income from continuing
operations...................... $ .49 .53 .46 .57 .42 .39 .29
Cash dividends paid.................. $ .25 1/3 .22 2/3 .20 .22 2/3 .19 .14 2/3 .12 2/3
Shareholders' equity................. $2.33 2.10 1.85 2.33 2.29 2.29 2.19
Ratio of earnings to fixed charges..... 14.8x 15.9x 13.4x 17.7x 19.7x
WARNER-LAMBERT HISTORICAL
Per share data(2):
Basic:
Income from continuing
operations...................... $1.50 1.03 .89 .97 .73
Diluted:
Income from continuing
operations...................... $1.45 .99 .88 .94 .71
Cash dividends paid.................. $ .64 .51 .46 .40 .32
Shareholders' equity................. $4.52 3.57 3.20 4.96
Ratio of earnings to fixed charges..... 11.2x 6.7x 7.1x 12.4x
WARNER-LAMBERT EQUIVALENTS
Per share data:
Basic:
Income from continuing
operations...................... $1.38 1.25 1.05 1.00 .75
Diluted:
Income from continuing
operations...................... $1.33 1.20 1.00 .98 .73
Cash dividends paid.................. $ .63 .57 .50 .37 .32
Shareholders' equity................. $5.23 5.33
</TABLE>
- --------------------------
* Amounts represent Pfizer's historical dividend rate per common share.
** Warner-Lambert historical information is for the nine months ended September
30, 1999 and 1998 and for the six months ended June 30, 1999 and 1998.
(1) Amounts reflect Pfizer's 3-for-1 stock split in June 1999.
(2) Amounts reflect Warner-Lambert's 3-for-1 stock split in May 1998.
II-5
<PAGE> 41
PFIZER AND WARNER-LAMBERT
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheets combine
the historical consolidated balance sheets of Pfizer and the historical
consolidated balance sheets of Warner-Lambert giving effect to the Merger as if
it had been consummated on each balance sheet date. The following unaudited pro
forma condensed combined statements of income combine the historical
consolidated statements of income of Pfizer and Warner-Lambert giving effect to
the Merger as if it had occurred on January 1, 1996.
This information should be read in conjunction with the:
- accompanying notes to the unaudited pro forma condensed combined
financial statements
- separate historical financial statements of Pfizer as of October 3, 1999
and for the nine months ended October 3, 1999 and September 27, 1998,
which are contained in Pfizer's Quarterly Report on Form 10-Q for the
nine month period ended October 3, 1999
- separate historical financial statements of Pfizer as of July 4, 1999 and
for the six months ended July 4, 1999 and June 28, 1998, which are
contained in Pfizer's Quarterly Report on Form 10-Q for the six month
period ended July 4, 1999
- separate historical financial statements of Pfizer for each of the years
in the three-year period ended December 31, 1998, which are contained in
Pfizer's Annual Report on Form 10-K for the fiscal year ended December
31, 1998
- separate historical financial statements of Warner-Lambert as of June 30,
1999 and for the six months ended June 30, 1999 and 1998, which are
contained in Warner-Lambert's Quarterly Report on Form 10-Q for the six
month period ended June 30, 1999
- separate historical financial statements of Warner-Lambert for each of
the years in the three-year period ended December 31, 1998, which are
contained in Warner-Lambert's registration statement on Form S-4 dated
April 19, 1999 which reflects its merger with Agouron Pharmaceuticals,
Inc. accounted for under the pooling-of-interests accounting method
For ease of reference, all pro forma statements use Pfizer's period-end
date and no adjustments were made to Warner-Lambert's reported information.
The pro forma data is not necessarily indicative of the results of
operations that would have occurred had the Merger been consummated on the dates
indicated or of future operations of the combined company.
II-6
<PAGE> 42
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
AS OF OCTOBER 3, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------- -------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............................. $ 942
Short-term investments................................ 3,966
Accounts receivable, less allowance for doubtful
accounts............................................ 3,618
Short-term loans...................................... 281
Inventories........................................... 1,638
Prepaid expenses...................................... 1,039
------- ------- ------ -------
Total current assets............................. 11,484
Long-term loans and investments....................... 1,541
Property, plant and equipment, less accumulated
depreciation........................................ 5,059
Goodwill, less accumulated amortization............... 776
Other assets, deferred taxes and deferred charges..... 1,379
------- ------- ------ -------
Total Assets..................................... $20,239
======= ======= ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings, including current portion of
long-term debt...................................... $ 5,486
Accounts payable...................................... 694
Income taxes payable.................................. 909
Accrued compensation and related items................ 576
Other current liabilities............................. 1,427
------- ------- ------ -------
Total current liabilities........................ 9,092
Long-term debt........................................ 525
Postretirement benefit obligation other than pension
plans............................................... 351
Deferred taxes on income.............................. 272
Other noncurrent liabilities.......................... 1,213
------- ------- ------ -------
Total liabilities................................ 11,453
------- ------- ------ -------
Shareholders' Equity
Preferred stock....................................... --
Common stock.......................................... 212
Additional paid-in capital............................ 5,580
Retained earnings..................................... 13,085
Accumulated other comprehensive expense............... (478)
Employee benefit trusts............................... (3,390)
Treasury stock, at cost............................... (6,223)
------- ------- ------ -------
Total shareholders' equity....................... 8,786
------- ------- ------ -------
Total liabilities and shareholders' equity....... $20,239
======= ======= ====== =======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-7
<PAGE> 43
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
AS OF JULY 4, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------- -------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............. $ 1,223 1,300 2,523
Short-term investments................ 3,289 3,289
Accounts receivable, less allowance
for doubtful accounts............... 3,396 1,949 (356)(a) 4,989
Short-term loans...................... 370 370
Inventories........................... 1,805 1,027 2,832
Prepaid expenses...................... 1,068 725 1,793
------- ------- ------ -------
Total current assets............. 11,151 5,001 (356) 15,796
Long-term loans and investments....... 1,521 1,521
Property, plant and equipment, less
accumulated depreciation............ 4,738 3,007 7,745
Goodwill, less accumulated
amortization........................ 779 779
Other assets, deferred taxes and
deferred charges.................... 1,451 2,318 (123)(b) 3,646
------- ------- ------ -------
Total Assets..................... $19,640 10,326 (479) 29,487
======= ======= ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings, including
current portion of long-term debt... $ 4,938 197 5,135
Accounts payable...................... 770 1,700 (356)(a) 2,114
Dividends payable..................... 321 321
Income taxes payable.................. 907 205 (34)(b) 1,078
Accrued compensation and related
items............................... 535 214 749
Other current liabilities............. 1,339 932 2,271
------- ------- ------ -------
Total current liabilities........ 8,810 3,248 (390) 11,668
Long-term debt........................ 530 1,636 2,166
Postretirement benefit obligation
other than pension plans............ 354 354
Deferred taxes on income.............. 185 185
Other noncurrent liabilities.......... 1,110 1,214 2,324
------- ------- ------ -------
Total liabilities................ 10,989 6,098 (390) 16,697
------- ------- ------ -------
Shareholders' Equity
Preferred stock....................... -- -- --
Common stock.......................... 212 962 (855)(c) 319
Additional paid-in capital............ 5,575 625 (409)(c) 5,791
Retained earnings..................... 12,367 4,536 (89)(b) 16,814
Accumulated other comprehensive
expense............................. (401) (631) (1,032)
Employee benefit trusts............... (3,505) (3,505)
Treasury stock, at cost............... (5,597) (1,264) 1,264(c) (5,597)
------- ------- ------ -------
Total shareholders' equity....... 8,651 4,228 (89) 12,790
------- ------- ------ -------
Total liabilities and
shareholders' equity........... $19,640 10,326 (479) 29,487
======= ======= ====== =======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-8
<PAGE> 44
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------- -------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents......... $ 1,552 946 2,498
Short-term investments............ 2,377 2,377
Accounts receivable, less
allowance for doubtful
accounts........................ 2,914 1,784 (282)(a) 4,416
Short-term loans.................. 150 150
Inventories....................... 1,828 993 2,821
Prepaid expenses.................. 1,110 629 1,739
------- ------ ------ -------
Total current assets......... 9,931 4,352 (282) 14,001
Long-term loans and investments... 1,756 1,756
Property, plant and equipment,
less accumulated depreciation... 4,415 2,822 7,237
Goodwill, less accumulated
amortization.................... 813 813
Other assets, deferred taxes and
deferred charges................ 1,387 2,449 (131)(b) 3,705
------- ------ ------ -------
Total Assets................. $18,302 9,623 (413) 27,512
======= ====== ====== =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Short-term borrowings, including
current portion of long-term
debt............................ $ 2,729 264 2,993
Accounts payable.................. 971 1,621 (282)(a) 2,310
Dividends payable................. 285 285
Income taxes payable.............. 1,162 248 (33)(b) 1,377
Accrued compensation and related
items........................... 614 233 847
Other current liabilities......... 1,431 981 2,412
------- ------ ------ -------
Total current liabilities.... 7,192 3,347 (315) 10,224
Long-term debt.................... 527 1,267 1,794
Postretirement benefit obligation
other than pension plans........ 359 359
Deferred taxes on income.......... 197 197
Other noncurrent liabilities...... 1,217 1,129 2,346
------- ------ ------ -------
Total liabilities............ 9,492 5,743 (315) 14,920
------- ------ ------ -------
Shareholders' Equity
Preferred stock................... -- -- --
Common stock...................... 210 962 (856)(c) 316
Additional paid-in capital........ 5,506 521 (386)(c) 5,641
Retained earnings................. 11,439 4,038 (98)(b) 15,379
Accumulated other comprehensive
expense......................... (234) (399) (633)
Employee benefit trusts........... (4,200) (4,200)
Treasury stock, at cost........... (3,911) (1,242) 1,242(c) (3,911)
------- ------ ------ -------
Total shareholders' equity... 8,810 3,880 (98) 12,592
------- ------ ------ -------
Total liabilities and
shareholders' equity....... $18,302 9,623 (413) 27,512
======= ====== ====== =======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements
II-9
<PAGE> 45
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED OCTOBER 3, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------- -------------- -------------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales...................................... $10,245
Alliance revenue............................... 1,452
------- ------ ------- ------
Total revenues............................... 11,697
------- ------ ------- ------
Costs and expenses:
Cost of sales................................ 1,832
Selling, informational and administrative
expenses.................................. 4,606
Research and development expenses............ 2,016
Other deductions -- net...................... 99
------- ------ ------- ------
Income from continuing operations before
provision for taxes and minority interests... 3,144
Provision for taxes............................ 896
Minority interests............................. 3
------- ------ ------- ------
Income from continuing operations.............. $ 2,245
======= ====== ======= ======
Income from continuing operations per common
share -- basic............................... $ .60
======= ====== ======
Income from continuing operations per common
share -- diluted............................. $ .57
======= ====== ======
Weighted average shares used to calculate
earnings per common share amounts
Basic..................................... 3,778
======= ====== ======= ======
Diluted................................... 3,912
======= ====== ======= ======
Cash dividends paid per common share........... $.22 2/3
======= ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-10
<PAGE> 46
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------ -------------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................................ $9,110
Alliance revenue................................. 568
------ ------ -------- -------
Total revenues................................... 9,678
Costs and expenses:
Cost of sales.................................. 1,401
Selling, informational and administrative
expenses.................................... 3,889
Research and development expenses.............. 1,581
Other deductions -- net........................ 519
------ ------ -------- -------
Income from continuing operations before
provision for taxes and minority interests..... 2,288
Provision for taxes.............................. 641
Minority interests............................... 3
------ ------ -------- -------
Income from continuing operations................ $1,644
====== ====== ======== =======
Income from continuing operations per common
share -- basic................................. $ .43
====== ====== =======
Income from continuing operations per common
share -- diluted............................... $ .42
====== ====== =======
Weighted average shares used to calculate
earnings per common share amounts
Basic.......................................... 3,791
====== ====== ======== =======
Diluted........................................ 3,950
====== ====== ======== =======
Cash dividends paid per common share............. $ .19
====== ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-11
<PAGE> 47
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JULY 4, 1999
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------ -------------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales........................................ $6,823 6,157 12,980
Alliance revenue................................. 883 -- (615)(d) 268
------ ------ ------ -------
Total revenues................................. 7,706 6,157 (615) 13,248
Costs and expenses:
Cost of sales.................................. 1,022 1,476 2,498
Selling, informational and administrative
expenses.................................... 3,135 2,813 (623)(b,d) 5,325
Research and development expenses.............. 1,322 556 1,878
Other deductions -- net........................ 50 145 195
------ ------ ------ -------
Income from continuing operations before
provision for taxes and minority interests..... 2,177 1,167 8 3,352
Provision for taxes.............................. 631 338 2(b) 971
Minority interests............................... 2 -- 2
------ ------ ------ -------
Income from continuing operations................ $1,544 829 6 2,379
====== ====== ====== =======
Income from continuing operations per common
share -- basic................................. $ .41 .97 .40
====== ====== =======
Income from continuing operations per common
share -- diluted............................... $ .39 .94 .39
====== ====== =======
Weighted average shares used to calculate
earnings per common share amounts
Basic....................................... 3,781 852 1,278 5,911
====== ====== ====== =======
Diluted..................................... 3,922 882 1,323 6,127
====== ====== ====== =======
Cash dividends paid per common share............. $.14 2/3 .40
====== ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements
II-12
<PAGE> 48
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 28, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------ -------------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales...................................... $6,000 5,014 11,014
Alliance revenue............................... 348 -- (322)(d) 26
------ ------ ------ -------
Total revenues................................. 6,348 5,014 (322) 11,040
Costs and expenses:
Cost of sales................................ 927 1,361 2,288
Selling, informational and administrative
expenses.................................. 2,566 2,211 (330)(b,d) 4,447
Research and development expenses............ 1,031 469 1,500
Other deductions -- net...................... 238 96 2(b) 336
------ ------ ------ -------
Income from continuing operations before
provision for taxes and minority interests... 1,586 877 6 2,469
Provision for taxes............................ 455 255 2(b) 712
Minority interests............................. 2 -- 2
------ ------ ------ -------
Income from continuing operations.............. $1,129 622 4 $ 1,755
====== ====== ====== =======
Income from continuing operations per common
share -- basic............................... $ .30 .73 .30
====== ====== =======
Income from continuing operations per common
share -- diluted............................. $ .29 .71 .29
====== ====== =======
Weighted average shares used to calculate
earnings per common share amounts
Basic........................................ 3,790 846 1,269 5,905
====== ====== ====== =======
Diluted...................................... 3,952 876 1,314 6,142
====== ====== ====== =======
Cash dividends paid per common share........... $.12 2/3 .32
====== ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements
II-13
<PAGE> 49
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------- -------------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................ $12,677 10,799 23,476
Alliance revenue..................... 867 (798)(d) 69
------- ------ ------ ------
Total revenues....................... 13,544 10,799 (798) 23,545
Costs and expenses:
Cost of sales...................... 2,094 2,861 4,955
Selling, informational and
administrative expenses......... 5,568 4,857 (814)(b,d) 9,611
Research and development
expenses........................ 2,279 1,047 3,326
Other deductions -- net............ 1,009 243 4(b) 1,256
------- ------ ------ ------
Income from continuing operations
before provision for taxes and
minority interests................. 2,594 1,791 12 4,397
Provision for taxes.................. 642 518 3(b) 1,163
Minority interests................... 2 2
------- ------ ------ ------
Income from continuing operations.... $ 1,950 1,273 9 3,232
======= ====== ====== ======
Income from continuing operations per
common share -- basic.............. $ 0.51 1.50 .55
======= ====== ======
Income from continuing operations per
common share -- diluted............ $ 0.49 1.45 .53
======= ====== ======
Weighted average shares used to
calculate earnings per common share
amounts
Basic.............................. 3,789 847 1,271 5,907
======= ====== ====== ======
Diluted............................ 3,945 879 1,319 6,143
======= ====== ====== ======
Cash dividends paid per common
share.............................. $.25 1/3 .64
======= ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-14
<PAGE> 50
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------- -------------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales............................... $10,739 8,476 $19,215
Alliance revenue........................ 316 (317)(d) (1)
------- ------ ------- -------
Total revenues.......................... 11,055 8,476 (317) 19,214
Costs and expenses:
Cost of sales......................... 1,776 2,504 4,280
Selling, informational and
administrative expenses............ 4,401 3,726 (330)(b,d) 7,797
Research and development expenses..... 1,805 785 2,590
Other deductions -- net............... 206 272 33(b) 511
------- ------ ------- -------
Income from continuing operations before
provision for taxes and minority
interests............................. 2,867 1,189 (20) 4,036
Provision for taxes..................... 775 327 (5)(b) 1,097
Minority interests...................... 10 10
------- ------ ------- -------
Income from continuing operations....... $ 2,082 862 (15) $ 2,929
======= ====== ======= =======
Income from continuing operations per
common share -- basic................. $ 0.55 1.03 $ .50
======= ====== =======
Income from continuing operations per
common share -- diluted............... $ 0.53 0.99 $ .48
======= ====== =======
Weighted average shares used to
calculate earnings per common share
amounts
Basic................................. 3,771 841 1,262 5,874
======= ====== ======= =======
Diluted............................... 3,909 868 1,302 6,079
======= ====== ======= =======
Cash dividends paid per common share.... $ .22 2/3 .51
======= ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-15
<PAGE> 51
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PFIZER WARNER-LAMBERT ADJUSTMENTS COMBINED
------ -------------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.................................... $9,864 7,299 17,163
Costs and expenses:
Cost of sales.............................. 1,695 2,347 4,042
Selling, informational and administrative
expenses................................ 3,859 3,131 6,990
Research and development expenses.......... 1,567 652 2,219
Other deductions -- net.................... 215 31 123(b) 369
------ ------ ----- -------
Income from continuing operations before
provision for taxes and minority
interests............................... 2,528 1,138 (123) 3,543
Provision for taxes.......................... 758 322 (37)(b) 1,043
Minority interests........................... 6 69 75
------ ------ ----- -------
Income from continuing operations............ $1,764 747 (86) 2,425
====== ====== ===== =======
Income from continuing operations per common
share -- basic............................. $ .47 .89 .42
====== ====== =======
Income from continuing operations per common
share -- diluted........................... $ .46 .88 .40
====== ====== =======
Weighted average shares used to calculate
earnings per common share amounts
Basic...................................... 3,743 834 1,251 5,828
====== ====== ===== =======
Diluted.................................... 3,864 850 1,275 5,989
====== ====== ===== =======
Cash dividends paid per common share......... $ .20 .46
====== ======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements, which are an integral part of these statements.
II-16
<PAGE> 52
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
1. DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION
The Merger Agreement provides that each share of Warner-Lambert Common
Stock will be exchanged for 2.5 shares of Pfizer Common Stock. The Merger, which
is expected to be completed by the second quarter of 2000, is expected to be
accounted for under the pooling-of-interests method and, accordingly, financial
statements of the combined company will include Pfizer's historical consolidated
financial statements restated to include the historical consolidated financial
statements of Warner-Lambert. The Merger is subject to customary closing
conditions, including regulatory and Pfizer and Warner-Lambert stockholder
approval.
2. ACCOUNTING POLICIES AND FINANCIAL STATEMENT CLASSIFICATIONS
Pfizer and Warner-Lambert will review their accounting policies and
financial statement classifications and, as a result of that review, it may be
necessary to restate the combined entity's financial statements to conform to
those accounting policies and classifications that are determined to be more
appropriate.
3. INTERCOMPANY TRANSACTIONS
Transactions between Pfizer and Warner-Lambert are limited to the Lipitor
Marketing Agreement. Upon merger, this arrangement would be considered an
intercompany transaction. All significant balances and transactions related to
this arrangement have been eliminated from the pro forma combined accounts.
4. PRO FORMA ADJUSTMENTS
A restructuring charge to operations by the combined company is expected to
occur subsequent to the Merger to reflect the combination of the two companies.
Such charges, which have not yet been estimated, may include amounts with
respect to the elimination of excess facilities, severance costs and the
write-off of certain intangibles and fixed assets. The effects of these costs
have not been reflected in this pro forma condensed combined financial
information.
Total transaction costs to be incurred by Pfizer and Warner-Lambert in
connection with the Merger are estimated to be approximately $125 million. These
costs, related to legal, printing, accounting, financial advisory services and
other expenses, will be expensed upon consummation of the Merger and are not
reflected in the pro forma statements.
Warner-Lambert financial information for the nine month period ended
September 30, 1999 is not yet available.
Adjustments included in the column with the heading "Pro Forma Adjustments"
are as follows:
(a) Elimination of Pfizer's alliance revenue receivable and Warner-Lambert's
alliance revenue payable under the Lipitor Marketing Agreement.
II-17
<PAGE> 53
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS -- (CONTINUED)
(b) Elimination of Lipitor milestone payments made to Warner-Lambert by Pfizer
under the Lipitor Marketing Agreement which were capitalized and are being
amortized by Pfizer. We have assumed that these payments were recognized as
income by Warner-Lambert.
(c) Adjustments to common stock, additional paid-in capital and treasury stock
reflect the retirement of Warner-Lambert treasury shares and the issuance
of Pfizer Common Stock to effect the Merger. The amount has been calculated
by multiplying the number of shares of Warner-Lambert Common Stock
outstanding by the exchange ratio. The number of shares to be issued at
consummation of the Merger will be based on the actual number of shares of
Warner-Lambert Common Stock outstanding at that time.
(d) Elimination of Lipitor alliance revenue under the Lipitor Marketing
Agreement.
The pro forma combined basic and diluted earnings per share for the
respective periods presented are based on the combined weighted average number
of common shares and combined adjusted weighted average shares, respectively of
Pfizer and Warner-Lambert. The number of weighted average common shares and
adjusted weighted average shares of Warner-Lambert is based on an exchange ratio
of 2.5 shares of Pfizer Common Stock for each issued and outstanding share of
Warner-Lambert.
The pro forma financial statements do not reflect any future cost savings,
estimated at $1.2 billion, that may result from the reduction of overhead
expenses, changes in corporate infrastructure and the elimination of redundant
expenses. Although management expects that cost savings will result from the
Merger, there can be no assurance that cost savings will be achieved.
The statements contained in this section may be deemed to be
forward-looking statements within the meaning of Section 27A of the Securities
Act. Forward-looking statements are typically identified by the words "believe,"
"expect," "anticipate," "intend," "estimate" and similar expressions. These
forward-looking statements are based largely on management's expectations and
are subject to a number of uncertainties. Actual results could differ materially
from these forward-looking statements. Neither Pfizer nor Warner-Lambert
undertakes any obligation to update publicly or revise any forward-looking
statements.
II-18
<PAGE> 54
SECTION THREE
INFORMATION ABOUT THE MEETINGS AND VOTING
SEE CAUTIONARY NOTICE ON COVER PAGE
The Pfizer Board is using this Joint Proxy Statement/Prospectus to solicit
proxies from the holders of Pfizer common stock for use at the Pfizer
stockholder meeting. The Warner-Lambert Board is also using this document to
solicit proxies from the holders of Warner-Lambert common stock for use at the
Warner-Lambert meeting. We are first mailing this Joint Proxy
Statement/Prospectus and accompanying form of proxy to Pfizer and Warner-Lambert
stockholders on or about [ ], 1999.
MATTERS RELATING TO THE MEETINGS
<TABLE>
<CAPTION>
PFIZER MEETING WARNER-LAMBERT MEETING
-------------- ----------------------
<C> <S> <C>
Time and Place: [ ], 1999 [ ], 1999
Purpose of Meeting is to 1. The proposal to issue 1. The proposal to approve
Vote on the Following Pfizer common stock in and adopt the Merger
Items: the Merger, and Agreement and the
Merger, and
2. Such other matters as 2. Such other matters as
may properly come before may properly come
the Pfizer meeting, before the Warner-
including the approval Lambert meeting,
of any adjournment of including the
the meeting. approval of any
adjournment of the
meeting.
Record Date: The record date for shares The record date for shares
entitled to vote is entitled to vote is
[ ], 1999. [ ], 1999.
Outstanding Shares Held on As of , 1999, As of , 1999,
Record Date: there were approximately there were shares
shares of Pfizer of Warner- Lambert common
common stock outstanding. stock outstanding.
Shares Entitled to Vote: Shares entitled to vote Shares entitled to vote
are the Pfizer common are the Warner-Lambert
stock held at the close of common stock held at the
business on the record close of business on the
date, , 1999. record date, ,
1999.
Each share of Pfizer Each share of Warner-
common stock that you own Lambert common stock that
entitles you to one vote. you own entitles you to
Shares held by Pfizer in one vote. Shares held by
its treasury are not Warner- Lambert in its
voted. treasury are not voted.
</TABLE>
III-1
<PAGE> 55
<TABLE>
<CAPTION>
PFIZER MEETING WARNER-LAMBERT MEETING
-------------- ----------------------
<C> <S> <C>
Quorum Requirement: A quorum of stockholders A quorum of stockholders
is necessary to hold a is necessary to hold a
valid meeting. valid meeting.
The presence in person or The presence in person or
by proxy at the meeting of by proxy at the meeting of
holders of a majority of holders of a majority of
the outstanding shares of the outstanding shares of
Pfizer common stock Warner- Lambert common
entitled to vote at the stock entitled to vote at
meeting is a quorum. the meeting is a quorum.
Abstentions and broker Abstentions and broker
"non-votes" count as "non-votes" count as
present for establishing a present for establishing a
quorum. Shares held by quorum. Shares held by
Pfizer in its treasury do Warner-Lambert in its
not count toward a quorum. treasury do not count
toward a quorum.
A broker non-vote occurs A broker non-vote occurs
on an item when a broker on an item when a broker
is not permitted to vote is not permitted to vote
on that item without on that item without
instruction from the instruction from the
beneficial owner of the beneficial owner of the
shares and no instruction shares and no instruction
is given. is given.
Shares Beneficially Owned [ ] shares of Pfizer [ ] shares of
by Pfizer and common stock, including Warner- Lambert common
Warner-Lambert Directors exercisable options. These stock, including
and Executive Officers shares represent in total exercisable options. These
as of November approximately [ ]% shares represent in total
, 1999: of the outstanding shares approximately [ ]%
of Pfizer common stock. of the outstanding shares
of Warner-Lambert common
stock.
</TABLE>
III-2
<PAGE> 56
VOTE NECESSARY TO APPROVE PFIZER AND WARNER-LAMBERT PROPOSALS
<TABLE>
<CAPTION>
COMPANY VOTE NECESSARY*
- ------- ---------------
<S> <C>
Pfizer: Approval of the Stock Issuance
Proposal requires the affirmative
vote of at least a majority of the
votes cast by the holders of Pfizer
common stock provided that the total
votes cast represent a majority of
the outstanding shares of Pfizer
common stock. Abstentions have the
same effect as a vote against.
Warner-Lambert: Approval of the Merger Proposal
requires the affirmative vote of at
least a majority of the outstanding
shares of Warner-Lambert common
stock. Abstentions have the same
effect as a vote against.
</TABLE>
- -------------------------
* Under New York Stock Exchange rules, if your broker holds your shares in its
name, your broker may not vote your shares absent instructions from you.
Without your voting instructions, a broker non-vote will occur and will have
the effect of a vote against in the case of either the Stock Issuance Proposal
or the Merger Proposal.
PROXIES
Voting Your Proxy. You may vote in person at your meeting or by proxy. We
recommend you vote by proxy even if you plan to attend your meeting. You can
always change your vote at the meeting.
Voting instructions are included on your proxy card. If you properly give
your proxy and submit it to us in time to vote, one of the individuals named as
your proxy will vote your shares as you have directed. You may vote for or
against the proposals or abstain from voting.
III-3
<PAGE> 57
HOW TO VOTE BY PROXY
<TABLE>
<CAPTION>
PFIZER WARNER-LAMBERT
------ --------------
<C> <S> <C>
By Telephone*: Call toll-free Call toll-free
1- - - and follow 1- - - and follow
the instructions. You will need the instructions. You will need
to give the personal to give the personal
identification number contained identification number contained
on your proxy card. on your proxy card.
By Internet*: Go to www. .com and Go to www. .com and
follow the instructions. You follow the instructions. You
will need to give the personal will need to give the personal
identification number contained identification number contained
on your proxy card. on your proxy card.
In Writing: Complete, sign, date and return Complete, sign, date and return
your proxy card in the enclosed your proxy card in the enclosed
envelope. envelope.
</TABLE>
- -------------------------
* If you hold shares through a broker or other custodian, please check the
voting form used by that firm to see if it offers telephone or internet
voting.
PROXIES FOR PARTICIPANTS IN PFIZER PLAN
[To Come]
PROXIES FOR PARTICIPANTS IN WARNER-LAMBERT PLAN
[To Come]
If you submit your proxy but do not make specific choices, your proxy will
follow the Board's recommendations and vote your shares:
<TABLE>
<CAPTION>
PFIZER WARNER-LAMBERT
------ --------------
<S> <C> <C> <C>
- - "FOR" the Stock Issuance Proposal - "FOR" the Merger Proposal
- - "FOR" any proposal by the Pfizer - "FOR" any proposal by the Warner-
Board to adjourn the Pfizer meeting Lambert Board to adjourn the Warner-
Lambert meeting
- - In its discretion as to any other - In its discretion as to any other
business as may properly come before business as may properly come before
the Pfizer meeting the Warner- Lambert meeting
</TABLE>
Revoking Your Proxy. You may revoke your proxy before it is voted by:
- submitting a new proxy with a later date, including a proxy given by
telephone or internet;
- notifying your company's Secretary in writing before the meeting that you
have revoked your proxy; or
- voting in person at the meeting.
Voting in Person. If you plan to attend a meeting and wish to vote in
person, we will give you a ballot at the meeting. However, if your shares are
held in the name of your broker, bank or other nominee, you must bring an
account statement or letter from the
III-4
<PAGE> 58
nominee indicating that you are the beneficial owner of the shares on
, , the record date for voting.
People with Disabilities. We can provide reasonable assistance (including
audio enhancement) to help you participate in the meeting if you tell us about
your disability and your plan to attend. Please call or write the Secretary of
your company at least two weeks before your meeting at the number or address
under "Summary -- The Companies".
Proxy Solicitation. We will pay our own costs of soliciting proxies.
In addition to this mailing, Pfizer and Warner-Lambert employees may
solicit proxies personally, electronically or by telephone. Pfizer is paying
[ ] a fee of $[ ] plus expenses to help with the solicitation.
Warner-Lambert is paying [ ] a fee of $[ ] plus expenses to
help with the solicitation.
The extent to which these proxy soliciting efforts will be necessary
depends entirely upon how promptly proxies are submitted. You should send in
your proxy by mail, telephone or the internet without delay. We also reimburse
brokers and other nominees for their expenses in sending these materials to you
and getting your voting instructions.
Do not send in any stock certificates with your proxy cards. The exchange
agent will mail transmittal forms with instructions for the surrender of stock
certificates for Warner-Lambert common stock to former Warner-Lambert
stockholders as soon as practicable after the completion of the applicable
Merger.
OTHER BUSINESS; ADJOURNMENTS
We are not currently aware of any other business to be acted upon at either
meeting. If, however, other matters are properly brought before either meeting,
or any adjourned meeting, your proxies will have discretion to vote or act on
those matters according to their best judgment, including to adjourn the
meeting.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or
by proxy at the meeting, whether or not a quorum exists, without further notice
other than by an announcement made at the meeting. Neither of us currently
intends to seek an adjournment of our meeting.
III-5
<PAGE> 59
SECTION FOUR
CERTAIN LEGAL INFORMATION
SEE CAUTIONARY NOTICE ON COVER PAGE
COMPARISON OF PFIZER-WARNER-LAMBERT STOCKHOLDER RIGHTS
The rights of Warner-Lambert stockholders under Delaware law, the
Warner-Lambert charter and the Warner-Lambert by-laws prior to the Merger are
substantially the same as the rights they will have as Pfizer stockholders
following the Merger under Delaware law, the Pfizer charter and the Pfizer
by-laws, with certain principal exceptions summarized in the chart below. Copies
of the Warner-Lambert charter, the Warner-Lambert by-laws, the Pfizer charter
and the Pfizer by-laws are incorporated by reference and will be sent to holders
of shares of Warner-Lambert common stock upon request. See "Where You Can Find
More Information." The summary contained in the following chart is not intended
to be complete and is qualified by reference to Delaware law, the Warner-Lambert
charter, the Warner-Lambert by-laws, the Pfizer charter and the Pfizer by-laws.
SUMMARY OF MATERIAL DIFFERENCES BETWEEN CURRENT RIGHTS OF
WARNER-LAMBERT STOCKHOLDERS AND RIGHTS THOSE STOCKHOLDERS WILL HAVE AS
PFIZER STOCKHOLDERS FOLLOWING THE MERGER
<TABLE>
<CAPTION>
WARNER-LAMBERT STOCKHOLDER RIGHTS PFIZER STOCKHOLDER RIGHTS
--------------------------------- --------------------------
<C> <S> <C>
Corporate Governance: Upon completion of the Merger, Upon completion of the
the rights of Warner-Lambert Merger, the rights of
stockholders who become Pfizer Pfizer stockholders will
stockholders in the Merger will be governed by Delaware
be governed by Delaware law, the law, the Pfizer charter
Pfizer charter and the Pfizer by- and the Pfizer by- laws.
laws. The charter and by-laws of The charter and by-laws of
Pfizer after the Merger will be Pfizer after the Merger
identical in all respects to will be identical in all
those of Pfizer prior to the respects to those of
Merger after giving effect to any Pfizer prior to the Merger
amendment to increase the size of after giving effect to any
the Pfizer Board. amendment to increase the
size of the Pfizer Board.
Authorized Capital Stock: The authorized capital stock of The authorized capital
Warner-Lambert consists of 1.2 stock of Pfizer is set
billion shares of common stock forth under "Description
and 5 million shares of preferred of Pfizer Capital
stock. Stock -- Authorized
Capital Stock" below.
Number of Directors: The Warner-Lambert Board The Pfizer Board currently
currently consists of 10 consists of 15 directors.
directors.
If the Merger is
completed, the size of the
Pfizer Board will be
increased from 15 to
[ ].
</TABLE>
IV-1
<PAGE> 60
<TABLE>
<CAPTION>
WARNER-LAMBERT STOCKHOLDER RIGHTS PFIZER STOCKHOLDER RIGHTS
--------------------------------- --------------------------
<C> <S> <C>
Classification of
Board of Directors: Warner-Lambert does not have a The Pfizer Board is
classified board. The divided into three
Warner-Lambert by-laws require classes, with each class
that all directors be elected at serving a staggered
each annual meeting of three-year term.
stockholders to serve until the
next annual meeting of
stockholders.
Removal of Directors: Warner-Lambert directors may be Pfizer directors may be
removed from office, with or removed from office only
without cause, by vote of a for cause and only by the
majority of the outstanding affirmative vote of at
stock. least 80% of all of the
outstanding shares of
capital stock as are
entitled to vote in the
election of directors.
Stockholder Action
by Written Consent: Warner-Lambert stockholders may Pfizer stockholders may
act by written consent in lieu of not act by written consent
a meeting of stockholders. in lieu of a meeting of
stockholders.
Call of Special Meetings
of Stockholders: The Warner-Lambert by-laws The Pfizer by-laws provide
provide that a special meeting of that the Chairman of the
stockholders may be called for Board or a majority of the
any purpose or purposes only by Board may call a special
(i) the Chairman of the Board, meeting of Pfizer
(ii) the President or (iii) a stockholders.
majority of the whole Board of
Directors.
Amendment of Charter
and By-laws: The Warner-Lambert by-laws may be The Pfizer by-laws may be
amended by a vote of a majority amended by a vote of the
of the outstanding shares of majority of the
Warner-Lambert common stock, or outstanding shares of
by the Board. Pfizer common stock, or by
the Board.
The Warner-Lambert charter The Pfizer charter
generally may be amended by the generally may be amended
affirmative vote of the holders by the affirmative vote of
of at least a majority of the the majority of the
outstanding shares of outstanding shares,
Warner-Lambert common stock. however the affirmative
vote of a supermajority
(80%) of the outstanding
shares is necessary to
amend certain sections of
Article Seventh and the
entire Article Eighth.
</TABLE>
IV-2
<PAGE> 61
<TABLE>
<CAPTION>
WARNER-LAMBERT STOCKHOLDER RIGHTS PFIZER STOCKHOLDER RIGHTS
--------------------------------- --------------------------
<C> <S> <C>
Stockholder Rights Plan: Warner-Lambert entered into a Pfizer entered into a
Rights Agreement, dated as of Rights Agreement, dated as
March 25, 1997, between of October 6, 1997,
Warner-Lambert and First Chicago between Pfizer and Chase
Trust Company of New York, as Mellon Shareholder
Rights Agent, as amended, Services L.L.C., as Rights
pursuant to which Warner-Lambert Agent, as amended,
has issued rights, exercisable pursuant to which Pfizer
only upon the occurrence of has issued rights,
certain events, to purchase its exercisable only upon the
Series A Junior Participating occurrence of certain
Preferred Stock. events, to purchase its
Series A Junior Preferred
Stock.
</TABLE>
SEE CAUTIONARY NOTICE ON COVER PAGE
DESCRIPTION OF PFIZER CAPITAL STOCK
The following summary of the terms of the capital stock of Pfizer prior to,
and after completion of, the Merger is not meant to be complete and is qualified
by reference to the Pfizer charter and Pfizer by-laws. Copies of the Pfizer
charter and Pfizer by-laws are incorporated by reference and will be sent to
holders of shares of Pfizer common stock and Warner-Lambert common stock upon
request. See "Where You Can Find More Information."
AUTHORIZED CAPITAL STOCK
Under the Pfizer charter, Pfizer's authorized capital stock consists of 9
billion shares of Pfizer common stock, $.05 par value, and 12 million shares of
preferred stock, without par value.
PFIZER COMMON STOCK
Pfizer Common Stock Outstanding. The outstanding shares of Pfizer common
stock are, and the shares of Pfizer common stock issued pursuant to the Merger
will be, duly authorized, validly issued, fully paid and nonassessable.
Voting Rights. Each holder of Pfizer common stock is entitled to one vote
for each share of Pfizer common stock held of record on the applicable record
date on all matters submitted to a vote of stockholders.
Dividend Rights; Rights Upon Liquidation. The holders of Pfizer common
stock are entitled to receive, from funds legally available for the payment
thereof, dividends when and as declared by resolution of the Pfizer Board,
subject to any preferential dividend rights granted to the holders of any
outstanding Pfizer preferred stock. In the event of liquidation, each share of
Pfizer common stock is entitled to share pro rata in any distribution of
Pfizer's assets after payment or providing for the payment of liabilities and
the liquidation preference of any outstanding Pfizer preferred stock.
Preemptive Rights. Holders of Pfizer common stock have no preemptive
rights to purchase, subscribe for or otherwise acquire any unissued or treasury
shares or other securities.
IV-3
<PAGE> 62
Preferred Stock Purchase Rights. Each holder of Pfizer common stock is
also the holder of one preferred stock purchase right for each share of common
stock of Pfizer. Each right represents the right to purchase one thousandth of a
share of Series A Junior Preferred Stock of Pfizer at a price of $275 and is
exercisable upon the occurrence of certain specified events.
PFIZER PREFERRED STOCK
Pfizer Preferred Stock Outstanding. As of November 12, 1999, no shares of
Pfizer preferred stock were issued and outstanding.
Blank Check Preferred Stock. Under the Pfizer charter, the Pfizer Board
has the authority, without stockholder approval, to create one or more classes
or series within a class of preferred stock, to issue shares of preferred stock
in such class or series up to the maximum number of shares of the relevant class
or series of preferred stock authorized, and to determine the preferences,
rights, privileges and restrictions of any such class or series, including the
dividend rights, voting rights, the rights and terms of redemption, the rights
and terms of conversion, liquidation preferences, the number of shares
constituting any such class or series and the designation of such class or
series.
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company is the transfer agent and registrar for the
Pfizer common stock.
STOCK EXCHANGE LISTING; DELISTING AND DEREGISTRATION OF WARNER-LAMBERT COMMON
STOCK
It is a condition to the Merger that the shares of Pfizer common stock
issuable in the Merger be approved for listing on the New York Stock Exchange,
subject to official notice of issuance. If the Merger is completed,
Warner-Lambert common stock will cease to be listed on the New York Stock
Exchange.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this Joint Proxy Statement/Prospectus and in
our documents incorporated by reference contain some forward-looking statements.
Forward-looking statements give our current expectations or forecasts of future
events. You can identify these statements by the fact that they do not relate
strictly to historical or current facts. They use words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe," and other words
and terms of similar meaning in connection with any discussion of future
operating or financial performance. In particular, these include statements
relating to:
- future actions;
- prospective products or product approvals;
- future performance or results of current or anticipated products, sales
efforts and expenses;
- the outcome of contingencies such as legal proceedings;
IV-4
<PAGE> 63
- expected cost saving and efficiencies;
- potential growth and performance of a combined company after a merger
between Pfizer and Warner-Lambert;
- projected revenues;
- annual R&D budget;
- the effect of the Merger; and
- financial results.
From time to time, we also may provide oral or written forward-looking
statements in other materials we release to the public.
Any and all of our forward-looking statements in this Joint Proxy
Statement/Prospectus, and in our documents incorporated by reference can be
affected by inaccurate assumptions we might make or by known or unknown risks
and uncertainties. Consequently, no forward-looking statement can be guaranteed.
Actual future results may vary materially.
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make on related
subjects in our reports to the SEC in, among other places, "Risk Factors" in
this document, and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our Annual Report on Form 10-K for the year ended
December 31, 1998.
Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. Pfizer cautions you not to place undue reliance on
the statements, which speak only as of the date of this Joint Proxy
Statement/Prospectus or, in the case of documents incorporated by reference, the
date of the document.
The cautionary statements contained or referred to in this section should
be considered in connection with any subsequent written or oral forward-looking
statements that Pfizer or persons acting on its behalf may issue. Pfizer
undertakes no obligation to review or confirm analysts' expectations or
estimates or to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date of this document or to reflect
the occurrence of unanticipated events.
LEGAL MATTERS
The validity of the Pfizer common stock to be issued to Warner-Lambert
stockholders in the Merger will be passed upon by Cadwalader, Wickersham & Taft,
counsel to Pfizer. It is a condition to the completion of the Merger that Pfizer
and Warner-Lambert receive an opinion from their counsel with respect to the tax
treatment of the Merger.
EXPERTS
The consolidated financial statements of Pfizer Inc. and subsidiaries as of
December 31, 1998, 1997, and 1996, and for the years then ended, incorporated in
Pfizer's
IV-5
<PAGE> 64
Annual Report on Form 10-K for the year ended December 31, 1998, have been
incorporated in this registration statement by reference in reliance on the
report, dated February 25, 1999, of KPMG LLP, independent certified public
accountants, also incorporated by reference herein, and on the authority of said
firm as experts in accounting and auditing.
IV-6
<PAGE> 65
SECTION FIVE
ADDITIONAL INFORMATION FOR STOCKHOLDERS
SEE CAUTIONARY NOTICE ON COVER PAGE
FUTURE STOCKHOLDER PROPOSALS
PFIZER
Any stockholder proposal for Pfizer's annual meeting in 2000 must be sent
to the Secretary of Pfizer at the address of Pfizer's principal executive office
given under "Summary -- The Companies". The deadline for notice of a proposal
for which a stockholder will conduct his or her own solicitation is February 27,
2000 (however, if the date of the annual meeting is not within 30 days of April
22, 2000, then the deadline for such notice becomes not less than 90 days prior
to the date of the annual meeting). On request, the Secretary of Pfizer will
provide detailed instructions for submitting proposals.
WARNER-LAMBERT
Warner-Lambert will hold an annual meeting in the year 2000 only if the
Merger has not already been completed. Notices of stockholders' proposals
submitted outside the processes of Rule 14a-8 under the Securities Exchange Act
of 1934 will be considered timely, pursuant to the advance notice requirement
set forth in Article III, Section 2 of the Warner-Lambert by-laws, if such
notices are delivered to or mailed and received by Warner-Lambert by December
29, 1999. Any such proposal or notice should be directed to the attention of the
Secretary, Warner-Lambert Company, 201 Tabor Road, Morris Plains, New Jersey
07950.
SEC rules set forth standards for the exclusion of some stockholder
proposals from a proxy statement for an annual meeting.
WHERE YOU CAN FIND MORE INFORMATION
Pfizer and Warner-Lambert file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
"http://www.sec.gov."
Pfizer filed a registration statement on Form S-4 to register with the SEC
the Pfizer common stock to be issued to Warner-Lambert stockholders in the
Merger. This Joint Proxy Statement/Prospectus is a part of that registration
statement and constitutes a prospectus of Pfizer in addition to being a proxy
statement of Pfizer and Warner-Lambert for their respective meetings. As allowed
by SEC rules, this Joint Proxy Statement/ Prospectus does not contain all the
information you can find in the registration statement or the exhibits to the
registration statement.
The SEC allows us to "incorporate by reference" information into this Joint
Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
Joint Proxy Statement/Prospectus,
V-1
<PAGE> 66
except for any information superseded by information in, or incorporated by
reference in, this Joint Proxy Statement/Prospectus. This Joint Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about our companies and their finances.
<TABLE>
<CAPTION>
PFIZER SEC FILINGS (FILE NO. 001-03619) PERIOD
- --------------------------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended April 4, 1999, July 4,
1999 and October 3, 1999
Current Reports on Form 8-K Filed on July 21, 1999, November 8,
1999 and November 12, 1999
The description of Pfizer common stock Filed on October 6, 1997
set forth in the Registration Statement
on Form 8-A
</TABLE>
<TABLE>
<CAPTION>
WARNER-LAMBERT SEC FILINGS
(FILE NO. 001-03608) PERIOD
-------------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999 and June
30, 1999
Current Reports on Form 8-K Filed on January 28, 1999, May 18,
1999, November 8, 1999, November 9,
1999 and November 12, 1999
Form S-4 Registration Statement Filed on April 19, 1999
(Registration No. 333-76875)
The description of Warner-Lambert Filed on March 27, 1997
common stock set forth in the
Registration Statement on Form 8-A/A
</TABLE>
We are also incorporating by reference additional documents that we file
with the SEC between the date of this Joint Proxy Statement/Prospectus and the
date of the meetings.
Pfizer has supplied all information contained or incorporated by reference
in this Joint Proxy Statement/Prospectus relating to Pfizer and Warner-Lambert.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this Joint Proxy Statement/Prospectus. Stockholders may obtain
documents incorporated by reference in this Joint Proxy Statement/Prospectus by
requesting them in writing or by telephone from the appropriate party at the
following address:
<TABLE>
<S> <C>
Pfizer Inc. Warner-Lambert Company
245 East 42nd Street 201 Tabor Road
New York, New York 10017 Morris Plains, NJ 07950
</TABLE>
If you would like to request documents from us, please do so by
, 1999 to receive them before the meetings.
V-2
<PAGE> 67
You can also get more information by visiting Pfizer's web site at
www. .com and Warner-Lambert's web site at www. .com. Web site
materials are not part of this Joint Proxy Statement/Prospectus.
You should rely only on the information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus to vote on the Pfizer Stock
Issuance Proposal and the Warner-Lambert Merger Proposal, as the case may be. We
have not authorized anyone to provide you with information that is different
from what is contained in this Joint Proxy Statement/Prospectus. This Joint
Proxy Statement/Prospectus is dated , 1999. You should not assume
that the information contained in the Joint Proxy Statement/ Prospectus is
accurate as of any date other than such date, and neither the mailing of this
Joint Proxy Statement/Prospectus to stockholders nor the issuance of Pfizer
common stock in the Merger shall create any implication to the contrary.
V-3
<PAGE> 68
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification Under Pfizer Charter and By-laws and Delaware Law. Article
Seventh of the Pfizer charter provides for the indemnification of directors or
officers, in accordance with the by-laws, to the fullest extent permitted by the
General Corporation Law of the State of Delaware. Article V of the by-laws of
Pfizer provides that Pfizer shall indemnify and hold harmless, to the fullest
extent permitted by law, any person made or threatened to be made a party to any
legal action by reason of the fact that such person is or was a director,
officer, employee or other corporate agent of Pfizer or any subsidiary or
constituent corporation or served any other enterprise at the request of Pfizer
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action. The General
Corporation Law of the State of Delaware provides for the indemnification of
directors and officers under certain conditions.
Pfizer D&O Insurance. The directors and officers of Pfizer are insured
under a policy of directors' and officers' liability insurance.
Merger Agreement Provisions Relating To Warner-Lambert and Pfizer Directors
and Officers. The Merger Agreement provides that for six years after the
closing, Warner-Lambert and Pfizer will maintain the current provisions
regarding indemnification of officers and directors contained in the charter and
by-laws of Warner-Lambert and Pfizer and will continue to honor any directors,
officers or employees indemnification agreements of Warner-Lambert and Pfizer
and their respective subsidiaries. Warner-Lambert and Pfizer shall also maintain
in effect the current policies of directors' and officers' liability insurance
and fiduciary liability insurance maintained by Warner-Lambert and Pfizer,
respectively (except that Pfizer may substitute policies which are, in the
aggregate, no less advantageous to the insureds in any material respect) with
respect to claims arising from facts or events which occurred on or before the
consummation of the Merger. In addition, Warner-Lambert and Pfizer shall
indemnify the directors and officers of Warner-Lambert and Pfizer, respectively,
to the fullest extent to which Warner-Lambert and Pfizer are permitted to
indemnify such officers and directors under their respective charters and by-
laws and applicable law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) List of Exhibits
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of November [ ], 1999
among Warner-Lambert Company, Pfizer Inc. and [Merger Sub].*
3.1 Amended and Restated Certificate of Incorporation of Pfizer
(incorporated herein by reference to Exhibit 3.1(i) in the
Registrant's Form 10-Q filing for the period ended April 4,
1999).
3.2 Amended and Restated By-laws of Pfizer (incorporated herein
by reference to Exhibit 3(ii) in the Registrant's Form 10-Q
filing for the period ended June 24, 1999).
</TABLE>
S4-II-1
<PAGE> 69
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
4.1 Rights Agreement, dated as of October 6, 1997, between
Pfizer and Chase Mellon Shareholder Services, L.L.C., as
Rights Agent, as amended (incorporated by reference to
Exhibit 4(i) in the Registrant's Form 10-K filing for the
period ended December 31, 1998).
5 Opinion of Cadwalader, Wickersham & Taft regarding the
validity of the securities being registered.*
8.1 Opinion of Cadwalader, Wickersham & Taft regarding material
federal income tax consequences relating to the Merger.*
8.2 Opinion of counsel to Warner-Lambert regarding material
federal income tax consequences relating to the Merger.*
12 Pfizer Inc. Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 in the Registrant's Annual Report on Form 10-K
filed on March 26, 1999 for the fiscal year ended December
31, 1998).
23.1 Consent of KPMG LLP.
23.2 Consent of independent public accountants to
Warner-Lambert.*
23.3 Consent of Cadwalader, Wickersham & Taft (included in the
opinions filed as Exhibit 5 and Exhibit 8.1 to this
Registration Statement).*
23.4 Consent of counsel to Warner-Lambert (included in the
opinion filed as Exhibit 8.2 to this Registration
Statement).*
24 Power of Attorney (Included on signature pages to this
Registration Statement).
99.1 Form of Pfizer Proxy Card.*
99.2 Form of Warner-Lambert Proxy Card.*
</TABLE>
- ---------------
* To be filed by Amendment.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth
S4-II-2
<PAGE> 70
in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be
deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(5) That every prospectus (i) that is filed pursuant to paragraph
(4) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(7) To respond to requests for information that is incorporated by
reference into the Joint Proxy Statement/Prospectus pursuant to Item 4,
10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
S4-II-3
<PAGE> 71
(8) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
S4-II-4
<PAGE> 72
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on November 15, 1999.
PFIZER INC.
(Registrant)
By: /s/ WILLIAM C. STEERE, JR.
-----------------------------------
William C. Steere, Jr.
Chief Executive Officer and
Chairman of the Board
Each person whose signature appears below hereby constitutes and appoints
C.L. Clemente, Terence J. Gallagher and Margaret M. Foran, and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) and supplements to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby grants to
such attorneys-in-fact and agents, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on November 15, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ WILLIAM C. STEERE, JR. Chief Executive Officer and Chairman
- --------------------------------------------------- of the Board (Principal Executive
William C. Steere, Jr. Officer)
/s/ DAVID L. SHEDLARZ Executive Vice President and Chief
- --------------------------------------------------- Financial Officer (Principal
David L. Shedlarz Financial Officer)
/s/ LORETTA V. CANGIALOSI Vice President -- Controller
- --------------------------------------------------- (Principal Accounting Officer)
Loretta V. Cangialosi
/s/ MICHAEL S. BROWN Director
- ---------------------------------------------------
Michael S. Brown
/s/ M. ANTHONY BURNS Director
- ---------------------------------------------------
M. Anthony Burns
</TABLE>
S4-II-5
<PAGE> 73
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ W. DON CORNWELL Director
- ---------------------------------------------------
W. Don Cornwell
/s/ GEORGE B. HARVEY Director
- ---------------------------------------------------
George B. Harvey
/s/ CONSTANCE J. HORNER Director
- ---------------------------------------------------
Constance J. Horner
/s/ STANLEY O. IKENBERRY Director
- ---------------------------------------------------
Stanley O. Ikenberry
/s/ HARRY P. KAMEN Director
- ---------------------------------------------------
Harry P. Kamen
/s/ THOMAS G. LABRECQUE Director
- ---------------------------------------------------
Thomas G. Labrecque
/s/ HENRY A. MCKINNELL President, Chief Operating Officer
- --------------------------------------------------- and Director
Henry A. McKinnell
/s/ DANA G. MEAD Director
- ---------------------------------------------------
Dana G. Mead
/s/ JOHN F. NIBLACK Vice Chairman and Director
- ---------------------------------------------------
John F. Niblack
/s/ FRANKLIN D. RAINES Director
- ---------------------------------------------------
Franklin D. Raines
/s/ RUTH J. SIMMONS Director
- ---------------------------------------------------
Ruth J. Simmons
/s/ JEAN-PAUL VALLES Director
- ---------------------------------------------------
Jean-Paul Valles
</TABLE>
S4-II-6
<PAGE> 74
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of November [ ], 1999
among Warner-Lambert Company, Pfizer Inc. and [Merger Sub].*
3.1 Amended and Restated Certificate of Incorporation of Pfizer
(incorporated herein by reference to Exhibit 3.1(i) in the
Registrant's Form 10-Q filing for the period ended April 4,
1999).
3.2 Amended and Restated By-laws of Pfizer (incorporated herein
by reference to Exhibit 3(ii) in the Registrant's Form 10-Q
filing for the period ended June 24, 1999).
4.1 Rights Agreement, dated as of October 6, 1997, between
Pfizer and Chase Mellon Shareholder Services, L.L.C., as
Rights Agent, as amended (incorporated by reference to
Exhibit 4(i) in the Registrant's Form 10-K filing for the
period ended December 31, 1998).
5 Opinion of Cadwalader, Wickersham & Taft regarding the
validity of the securities being registered.*
8.1 Opinion of Cadwalader, Wickersham & Taft regarding material
federal income tax consequences relating to the Merger.*
8.2 Opinion of counsel to Warner-Lambert regarding material
federal income tax consequences relating to the Merger.*
12 Pfizer Inc. Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 in the Registrant's Annual Report on Form 10-K
filed on March 26, 1999 for the fiscal year ended December
31, 1998).
23.1 Consent of KPMG LLP.
23.2 Consent of independent public accountants to
Warner-Lambert.*
23.3 Consent of Cadwalader, Wickersham & Taft (included in the
opinions filed as Exhibit 5 and Exhibit 8.1 to this
Registration Statement).*
23.4 Consent of counsel to Warner-Lambert (included in the
opinion filed as Exhibit 8.2 to this Registration
Statement).*
24 Power of Attorney (Included on signature pages to this
Registration Statement).
99.1 Form of Pfizer Proxy Card.*
99.2 Form of Warner-Lambert Proxy Card.*
</TABLE>
- ---------------
* To be filed by Amendment.
<PAGE> 1
EXHIBIT 12
PFIZER INC.
RATIO OF EARNINGS TO FIXED CHARGES
IN MILLIONS, EXCEPT RATIOS
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, OCTOBER 3,
------------------------------------------ ------------
1998 1997 1996 1995 1994 1999
------ ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Earnings before provision for income
taxes and minority interests........... $2,594 2,867 2,528 2,017 1,577 3,144
Less:
Minority interests..................... 2 10 6 7 5 3
Undistributed losses of unconsolidated
subsidiaries......................... -- -- -- -- (1) --
------ ------ ------ ------ ------ ------
Adjusted income.......................... 2,592 2,857 2,522 2,010 1,573 3,141
Fixed charges............................ 180 189 198 223 150 183
------ ------ ------ ------ ------ ------
Total earnings as defined................ 2,772 3,046 2,720 2,233 1,723 3,324
Fixed charges:
Interest expense(a).................... 136 147 161 188 122 150
Rents(b)............................... 44 42 37 35 28 33
------ ------ ------ ------ ------ ------
Fixed charges.......................... 180 189 198 223 150 183
Capitalized interest..................... 7 2 5 13 15 5
------ ------ ------ ------ ------ ------
Total fixed charges...................... $ 187 191 203 236 165 188
====== ====== ====== ====== ====== ======
Ratio of Earnings to fixed charges....... 14.8 15.9 13.4 9.5 10.4 17.7
====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(a) Interest expense includes amortization of debt discount and expenses.
(b) Rents included in the computation consist of one-third of rental expense
which the Company believes to be a conservative estimate of an interest
factor in its leases, which are not material.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Pfizer Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-4 of Pfizer Inc. of our report dated February 25, 1999, which is
incorporated by reference in the Annual Report on Form 10-K of Pfizer Inc. for
the year ended December 31, 1998, and to the reference to our firm under the
heading "Experts" in the registration statement.
New York, New York
November 15, 1999
