Pfizer to close on Wyeth acquisition; Aquiline OKs bid; Redstone keeps control of CBS, Viacom

By Cristal Cody

Tupelo, Miss., Oct. 14 - Pfizer Inc. won federal regulatory approval on Wednesday for its $68 billion acquisition of Wyeth, but the deal will require major animal health divestitures.

Also on Wednesday, Pan American Silver Corp. said it will acquire Aquiline Resources Inc. in a deal valued at C$626 million.

The transaction offers something for both of the Canadian miners, an analyst told Prospect News.

Meanwhile, an analyst said Wednesday that Sumner Redstone got the last laugh after the announcement of plans to sell $945 million of stock in CBS Corp. and Viacom, Inc. to pay off loans dashed any hopes the investor would lose voting control of the media companies.

Looking to Wall Street, the Dow Jones Industrial Average surprised investors and climbed above the 10,000 mark for the first time in a year.

The Dow closed Wednesday at 10,015.86, up 144.80 points, or 1.47%.

The broader indexes also rose.

The Standard & Poor's 500 index added 18.83 points, or 1.75%, to close at 1,092.02, and the Nasdaq Composite index rose 32.34 points, or 1.51%, to 2,172.23.

Pfizer plans quick deal close

Pfizer said Wednesday that it received approval for its acquisition of Wyeth from the U.S. Federal Trade Commission and the Canadian Competition Bureau.

With the final clearances in, Pfizer said it plans to close the acquisition on Thursday.

Pfizer will pay $33.00 in cash and 0.985 of a share of Pfizer stock for each share of Wyeth.

"We are pleased to have received all of the requisite regulatory approvals for our combination with Wyeth," Jeffrey Kindler, chairman and chief executive officer of Pfizer, said in a statement. "We now look forward to combining the two companies so that we can achieve meaningful results for patients, customers and the communities we serve, as well as for our shareholders."

The FTC said in a statement on Wednesday that Pfizer must sell half of Wyeth's Fort Dodge U.S. animal-health business and its horse vaccines to German drug company Boehringer Ingelheim Vetmedica, Inc. within 10 days of the acquisition.

"After a thorough investigation, the commission concluded that the transaction does not raise anticompetitive concerns in any human health product markets," the FTC said in the statement.

Shares of Madison, N.J.-based Wyeth closed up 88 cents, or 1.79%, at $50.04 on Wednesday.

New York-based Pfizer's stock gained 59 cents, or 3.52%, to $17.37.

Pan American deals for more silver

Under the initial deal terms, Pan American Silver said it will offer 0.2495 of a share plus one-tenth of a Pan American share purchase warrant for each Aquiline share.

The deal values Aquiline at C$7.47 per share, which represents a 36.6% premium over the stock's closing price on Tuesday.

Vancouver, B.C.-based Pan American Silver said it plans to make a formal takeover bid to acquire the shares and warrants as soon as possible.

Toronto-based Aquiline's board recommends shareholders tender their stock in the offer.

Pan American Silver has eight operating mines in Mexico, Peru, Argentina and Bolivia.

Aquiline Resources is exploring the Navidad project in southern Argentina, which is estimated to be one of the world's largest undeveloped silver deposits, as well as a gold deposit in Peru.

"With both the Navidad and La Preciosa development projects in our portfolio, Pan American is well on its way to producing 40 million ounces of silver annually," Geoffrey Burns, president and CEO of Pan American, said in a statement.

The transaction is subject to Argentinean antitrust laws, and the deal includes an C$18 million non-completion fee, according to the companies.

"This is a win-win transaction and the full board of Aquiline and I believe that tendering into Pan American's offer is in the best interests of our shareholders, through both the attractive up-front premium and the opportunity to participate in the tremendous upside we see as the development of Navidad unfolds in an enlarged Pan American," Aquiline CEO Marc Henderson said in the statement.

The deal should help Aquiline progress further in its exploration, an analyst who follows the silver mining industry told Prospect News on Wednesday.

"Aquiline has a large and developed silver deposit in Argentina, and they had run into a development problem," the analyst said. "There is a ban on open-pit mining in the province of Chubut, where the Navidad project is. That was acting as a hold on them moving forward. Pan American has come in with a premium to the market value and they see it as a good deal. They expect more clarity on the ban being lifted in mid-2010."

Aquiline shares jumped C$1.05, or 19.20%, to close at C$6.52 on Wednesday. The stock has traded from C$0.72 to C$7.19 over the past year.

Pan American's U.S.-listed shares fell $1.46, or 5.63%, to $24.46.

Redstone maintains control

Redstone plans to use the proceeds from the sale of $600 million in Viacom shares and $345 million in CBS stock to pay down debt from his closely held theater chain and stock holding company, National Amusements, Inc.

Although the sales reduce Redstone's equity stake to less than 8% in CBS and Viacom, he keeps a controlling voting stake of more than 75% in both New York-based media companies.

"Viacom and CBS shareholders have held out hope over the past year that somehow National Amusements' debt situation would cause NAI, and in turn, Sumner Redstone, to lose voting control of both Viacom and CBS," Richard Greenfield, an analyst with Pali Capital Inc., said in an investors note on Wednesday. "Now, any hopes have been completely eliminated - National Amusements will be essentially debt free, while maintaining its iron-clad grip on both Viacom and CBS."

Redstone is expected to pay off $500 million in debt due this month for the Dedham, Mass.-based chain, which operates theaters in the United States, the United Kingdom, Latin America and Russia.

Greenfield estimates that after the payment, National Amusements will have under $300 million of gross debt and about $2 billion of assets, including $1.3 billion of voting stock in Viacom and CBS.

"The lesson learned: Sumner Redstone builds assets and does not part with them easily," Greenfield said.

CBS shares rose 37 cents, or 3.05%, to $12.52, while Viacom's stock closed up 21 cents, or 0.73%, at $28.91 on Wednesday.

Mentioned in this article:

Aquiline Resources Inc. Toronto: AQI

CBS Corp. NYSE: CBS

Pan American Silver Corp. Nasdaq: PAAS

Pfizer Inc. NYSE: PFE

Viacom, Inc. NYSE: VIA-B

Wyeth NYSE: WYE

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