Moody's Investors Service confirmed the ratings of Pfizer, Inc. and changed the direction of its review of Warner-Lambert Company's long term ratings from direction uncertain to possible upgrade. These rating actions follow the announcement by Pfizer and Warner-Lambert that they plan a stock-for-stock merger, creating one of the largest pharmaceutical companies in the world. The Prime-1 ratings for commercial paper of both companies are not under review and are confirmed. On November 4, 1999 Moody's had placed Warner-Lambert's long term ratings on review, direction uncertain, pending the outcome of several merger scenarios, including the company's original plan to merge with American Home Products, Inc. Meanwhile, the status of American Home Product's ratings are unchanged; the A2 ratings on its long term debt remain on review, direction uncertain, while the Prime-1 rating for CP remains on review for possible downgrade. MOODY'S CONFIRMS PFIZER'S Aaa RATINGS; REVIEWS WARNER LAMBERT'S Aa3 RATINGS FOR POSSIBLE UPGRADE
The confirmation of Pfizer's ratings reflects the creation of a more robust enterprise, one with outstanding research and development capabilities, and superior financial strength. The merged entity is expected to possess a powerful new product lineup, very low or negative net debt and generate strong double-digit earnings growth. Moreover, the merger with Warner-Lambert would add the full potential of the blockbuster drug, Lipitor, for which Pfizer is already the marketing partner, as well as additional prescription drug product diversity, a leading OTC health care products business, and stepped up business scale.
Moody's said its review of Warner-Lambert's long term ratings will focus on the future legal structure of the organization and whether Pfizer will legally assume or otherwise support the debt obligations of Warner-Lambert. Assuming the deal is consummated more or less in its proposed form, WL's long term ratings are likely to be rated at or near Pfizer's Aaa ratings.
There are no new actions today on the ratings of AHP. As Moody's reported in its January 11, 2000 press release, AHP's A2 and Prime-1 ratings might be downgraded given the uncertainty associated with the ultimate scale of the fen-phen liability. Moody's review will focus on the level of participation in the fen-phen settlement -- the first opt-out period is underway and extends through March 31, 2000 -- as well as the results of any upcoming trials involving fen-phen. Under the scenario where concern over fen-phen meaningfully dissipates and AHP is successful in finding another merger partner, an upgrade of AHP's long term ratings would also be possible, hence the review, direction uncertain, on AHP's long terms ratings.
Ratings confirmed are:
Pfizer Inc - Aaa for issuer rating and industrial revenue bonds; and the company's Prime-1 for commercial paper.
Pfizer Canada, Inc. - Prime-1 for guaranteed commercial paper.
Warner-Lambert Company - Prime-1 for commercial paper.
Ratings under review for possible upgrade are:
Warner-Lambert Company - Aa3 for notes and industrial revenue bonds; and (P) Aa3 for shelf registration of debt securities.
Headquartered in New York City, Pfizer Inc is one of the top-ranking global pharmaceutical companies, with worldwide revenues of $16.2 billion in 1999. Warner-Lambert Company, a Morris Plains, New Jersey-based manufacturer of pharmaceutical, consumer health care and confectionery products, reported revenues of $12.9 billion in 1999.
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