Executive Summary

Warner-Lambert announces Jan. 13 it is "exploring strategic alternatives" to American Home Products' merger offer, "including meeting with Pfizer." The announcement, which makes an AmericanWarner merger appear unlikely, might have been spurred by shareholder pressure; W-L acknowledges Pfizer's bid "is better financially" than the proposed deal with AHP. Negotiations could focus on the size of Pfizer's bid. The company originally offered 2.5 shares per W-L share, however, since Pfizer's stock price slipped, the value of such a deal has changed. By market close Jan. 14, 2.5 Pfizer shares were worth 92-1/2, compared to 93-11/16 for a W-L share. In any case, the companies will have until Feb. 14 to talk, which is when a Delaware chancery court is scheduled to hear W-L's complaint seeking to end the Lipitor marketing agreement it has with Pfizer