Pfizer's Takeover Remedy

It's a done deal. Pfizer, the world's largest drugmaker, will be taking over its smaller rival Wyeth in a deal valued at $68 billion, the Wall Street Journal, Financial Times, and New York Times all report this morning. It is the largest acquisition in the pharma sector since Glaxo Wellcome acquired SmithKline Beecham for $76 billion in 2000, the WSJ writes. Meanwhile, the NYT puts the megadeal into today's perspective, saying it "would not only create a pharmaceutical behemoth but would be a rarity in the current financial tumult: a big acquisition that is not a desperate merger of two banks orchestrated by the government." On Sunday night, Pfizer's board agreed to the Wyeth deal, the NYT reports, citing people in the know. The acquisition calls for the drugmaker to raise $22.5 billion in loans, no small feat in this frozen credit market. According to the FT, Wyeth's strong lineup of vaccines and its biotech businesses were the draws for Pfizer. "And the two companies could save billions of dollars in costs by combining," the newspaper adds.

Staying on the M&A beat, French banks Crédit Agricole and Société Générale announced this morning they will be merging their asset-management businesses as the once high-margin business takes a pounding from sinking global markets and a wave of client redemptions, Bloomberg reports. There was no value on the deal, but the banks say it would create Europe's fourth-largest money-management firm.

On this side of the Atlantic, the fallout continues to grow over the generous bonus-payout scheme at Merrill Lynch in its final days of independence. It's turning into a "who knew what when?" story as more juicy details emerge. The FT, citing informed sources, breaks the news that "Bank of America played a role in Merrill Lynch's controversial decision to pay $4 billion in bonuses in December just as mounting losses were threatening to derail BofA’s takeover of the Wall Street firm." The bank contended last week that the bonuses were sanctioned by Merrill chief John Thain. Ken Lewis, Bank of America’s CEO, sacked Thain when the payments were made public. But according to an FT source, Bank of America brass was briefed on the bonus payout before the bonuses were approved at a Dec. 8 board meeting and advised Merrill on how to structure the compensation in cash and stock.

The unwinding controversy puts still further pressure on Bank of America's embattled CEO, Ken Lewis. The WSJ writes that the old guard at the bank is beginning to lose faith in the man handpicked to lead. "Hugh McColl Jr., Bank of America's buccaneering former chairman and chief executive, who picked Mr. Lewis as his successor, and James Hance, the bank's former chief financial officer, privately have expressed disappointment in certain decisions made by Bank of America during this financial crisis," the newspaper writes, citing "people close to the men."

Meanwhile, China has firmly rejected the claims of currency manipulation leveled last week by treasury secretary nominee Timothy Geithner. Su Ning, deputy governor of the People’s Bank of China, told Xinhua news agency over the weekend that Geithner's accusation "would sidetrack efforts to determine the real cause of the global financial crisis," the NYT reports. Last week Geithner suggested in written remarks that China was manipulating its currency to stoke the export of its goods versus those of the U.S. and other nations. A WSJ opinion piece penned by Bret Swanson says Geithner's diagnosis is backward: "Our weak-dollar policy, intended to pump up U.S. manufacturing and close the trade gap, backfired. Currency chaos led to a $30 trillion global crash, an energy shock, bank and auto failures, and possibly a new big government era," he writes.

The forecast for 2009 keeps getting worse. A new survey by the National Association for Business Economics (a collaboration of top private-sector economists) says that more companies will lay off employees and hold onto their cash in what it calls "the worst business conditions since the survey began in 1982." Making matters worse, lending is down at the nation's top banks, the WSJ reports, "even after they received $148 billion in taxpayer capital that was intended to help the economy by making loans more readily available." A coming week of ugly earnings reports from 137 S&P 500 companies and 12 Dow components looks set to confirm these bad omens, writes CNNMoney.com. No sector is faring worse than the auto-parts industry, writes the WSJ. Visteon, the main parts supplier for Ford, is discussing possible bankruptcy options, and Lear Co. is working with restructuring specialists amid a "fear the industry, which accounts for hundreds of billions of dollars of revenue and hundreds of thousands of jobs, may be headed for mass liquidations as auto production shrinks amid the global economic slump."

The theme at the 39th annual World Economic Forum, kicking off later this week, is "Shaping the Post-Crisis World." But many of the executives who had front-row seats leading us into this crisis will not be in attendance this year in Davos, Switzerland, the NYT reports. And the celebs, too, will be scarce; Angelina Jolie and Bono probably won't be making the trip. But it is the absence of so many fallen captains of industry that will be most noticeable. Davos regulars John Thain and Richard Fuld, to name a few, will be no-shows. Thain, after his abrupt ouster last week at Bank of America, will not be participating in a Jan. 31 panel called "The Bank of the Future," the newspaper writes.