Company Watch

Pfizer agrees to sell its consumer healthcare business

Our News Bureau - Mumbai

Pfizer said that it has reached an agreement to sell its Pfizer Consumer Healthcare (PCH) business to Johnson & Johnson for $16.6 billion in cash, resulting in about $13.5 billion in after-tax proceeds.

The agreement is approved by the Pfizer's Board of Directors and completes a review of strategic options for the consumer business that Pfizer initiated in February. "By obtaining excellent value for our consumer business, we have taken another important step to create value for our shareholders while transforming our company," said Pfizer Chairman and Chief Executive Officer Hank McKinnell. "With net proceeds from this sale, plus projected cash flow from ongoing operations over the next 30 months (net of capital expenditures and dividends) totalling approximately $34 billion, we will focus on our key priorities. They are—leveraging our internal research and development and strong pipeline of new medicines, continuing to acquire products and technology that will drive long-term growth of the business, and improve shareholder returns through actions such as the share purchase programme we are announcing today."

Pfizer now expects that during 2006-07, it will purchase up to $17 billion of the company's common stock. This includes up to $7 billion in 2006 and up to $10 billion in 2007, and reflects an increase in the company's share purchase authorisation from $5 billion in June 2005 to $18 billion, which has been approved by Pfizer's Board of Directors. As a result of its expanded share purchase activity, Pfizer expects the PCH divestiture to be non-dilutive to earnings in 2007 and accretive in 2008.

"Because of the high level of interest, we were able to accelerate our timetable for unlocking value and capitalising on the strong market for global consumer franchises," said Pfizer Vice-Chairman, David Shedlarz. "We will use the proceeds to invest both, in our future and build value today. To drive long-term growth, for example, we have acquired products, product candidates and technologies in priority areas ,such as Alzheimer's disease, diabetes, obesity and infectious diseases in just the last 12 months," Shedlarz added.

Pfizer Consumer Healthcare had revenue of $3.9 billion in 2005. Its portfolio of well-known global brands includes Listerine, Nicorette, Sudafed, Benadryl and Neosporin. Pfizer expects to close the transaction by the end of year subject to customary closing conditions, including regulatory approvals.