NEW YORK (AP) -- Pfizer Inc. will ask a judge in Delaware on Monday to speed up the drugmaker's lawsuit that could punch holes in the merger agreement between Warner-Lambert Co. and American Home Products Corp.
Warner-Lambert's $71 billion contract with American Home contains two provisions designed to discourage competing offers. Pfizer claims the provisions hurt Warner-Lambert's shareholders, who could receive more for their stock if the company is acquired by Pfizer in a bid currently worth $75 billion.A ruling from the Chancery Court in Delaware could come in four to six weeks, according to Lou Clemente, executive vice president for Pfizer.
"Assuming we win, we could put together a deal with Warner-Lambert in four to six months," he said. "It could be shorter than that, but we've seen no sign of that."
Pfizer's new, aggressive timetable is part of an upcoming full-court press by the company. Pfizer, best known for its impotence drug Viagra, will outline its strategy to investors and analysts on Tuesday at its headquarters in New York.
The winner in the fight for Warner-Lambert will become the world's largest prescription-drug company and control Lipitor, the No. 1 medicine to cut cholesterol with annual sales expected to hit $6 billion by 2002.
Lipitor is especially important to Pfizer, which has an agreement with Warner-Lambert to jointly market the drug. Last month, Pfizer was negotiating to extend the contract, but now finds itself trying to prevent Warner-Lambert from ending it as early as 2001.
William C. Steere Jr., chairman and chief executive of Pfizer, sent a letter Friday to Lodewijk de Vink, the chairman and chief executive of Warner-Lambert. Steere again claimed his offer was superior to American Home's.
"The fact that you and your board refused to give Pfizer the opportunity to make a superior proposal to a merger you were negotiating with American Home Products was, and continues to be, very troubling," Steere wrote. "I am always available to discuss this transaction with you."
The letter mirrored a note from de Vink to Pfizer's board of directors earlier in the week in which he appealed to them to end Pfizer's hostile bid.
Warner-Lambert, which also makes the AIDS drug Viracept and consumer products like gum and razors, has stood by its agreement with American Home, which makes the hormone replacement drug Premarin as well as Advil medicine and ChapStick lip balm. The two companies are headquartered just miles apart from each other in New Jersey.
Spokesmen for Warner-Lambert and American Home had no immediate comment.
If their agreement falls apart, American Home Products will get a $2 billion breakup fee, and the option to buy almost 15 percent of Warner-Lambert's stock for $83.81 a share. That stock purchase would prevent Pfizer, or any other potential bidder, from using a favorable accounting treatment known as "pooling."
Both provisions are common in merger contracts, but Steere has said he wasn't given a chance to make an offer for Warner-Lambert because of restrictions in the marketing agreement for Lipitor.
Pooling accounting allows two companies simply to add their financial statements together, which usually boosts their earnings per share. If Pfizer is forced to use what is known as purchase accounting, the premium paid for Warner-Lambert will have to be written off against Pfizer's earnings.
While the two accounting methods make no difference to Pfizer's cash flow, their earnings will look worse under purchase accounting. And many investors look at earnings per share as a barometer of strength.
However, the favorable pooling accounting is expected to be abolished next year, and many investors are starting to focus on cash flow instead of profits.
"It doesn't make a dime's worth of difference whether you use purchase or pooling accounting," said Samuel D. Isaly, portfolio manager for the Eaton Vance Worldwide Health Sciences Fund, which owns about 140,000 shares of Warner-Lambert. "We are cash-flow investors."
Pfizer's bid for Warner-Lambert does not include either a breakup fee or a pooling option to buy shares.
At 5:15 p.m. on the New York Stock Exchange, Warner-Lambert's stock was up 37 1/2 cents to $93.62 1/2, still above the $87.81-a-share offer from Pfizer and the $83.45-a-share offer from American Home Products.
Pfizer's stock fell 25 cents to $35.12 1/2 on the NYSE, where shares of American Home rose 43 3/4 cents to $55.933/4.