Pfizer raises $13.5-billion debt to part finance Wyeth acquisition

18 March 2009

The world's largest drugmaker Pfizer sold $13.5 billion in debt on Tuesday, to help fund its purchase of Wyeth. The debt was sold in five tranches, maturing from 2012 until 2039 and is reported to have raised $27 billion in interest, buy-side sources said, with about 1,700 orders placed, one trader said.

In January, Pfizer announced its plans to purchase Wyeth for $68 billion. The merger, which would greatly expand Pfizer's revenue and array of medicines, is expected to close by the end of the third quarter.  (See: Pfizer-Wyeth create $68-billion blockbuster deal)

Pfizer had lined up $22.5 billion in bank financing to support the acquisition, and analysts had expected the company to refinance part of those loans with bonds.

Pfizer's debt sale consist of $1.25 billion two-year floating rate notes priced at 195 basis points over the three-month London international bank offered rate.

It also included $3.5 billion three-year fixed-rate notes yielding 305 basis points more than comparable US Treasuries, $3 billion six-year notes yielding 340 basis points over Treasuries, $3.25 billion 10-year notes yielding 325 basis points over Treasuries and $2.5 billion 30-year bonds yielding 345 basis points over Treasuries.

If the size of Pfizer's bond sale remains where it was launched, it will be the second-largest US dollar-denominated corporate bond ever priced, behind Roche's Holding's $16 billion deal sold last month.had sold those bonds to finance its acquisition of Genentech (See: Roche clinches Genentech deal for $47 billion). Some investors believe the success of Roche's deal paved the way for Pfizer to sell such a large bond offering.