Filed by Pfizer Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant Rule 14a-12
of the Securities Exchange Act of 1934
Commission File No: 001-02516
Subject Company: Pharmacia Corp.
Articles from Pfizer newsletter disseminated to Pfizer employees through its
internal intranet:
IMPORTANT CONDITION OF ACQUISITION MET AS PHARMACIA COMPLETES SPIN-OFF
OF MONSANTO
August 14, 2002
PFIZER'S ACQUISITION OF PHARMACIA IS SUBJECT TO A NUMBER OF CONDITIONS BEFORE IT
CAN BE COMPLETED. ONE OF THESE CONDITIONS WAS MET YESTERDAY, WHEN PHARMACIA
COMPLETED THE SPIN-OFF OF ITS AGRICULTURAL SUBSIDIARY TO PHARMACIA SHAREHOLDERS.
Peapack, New Jersey - In a letter to Pharmacia colleagues, CEO Fred Hassan
called the Monsanto spin-off, "a major milestone in the evolution of our
organization and in the history of biotechnology."
Some history: In April 2000, Pharmacia & Upjohn and Monsanto completed a merger.
The name of the combined company became Pharmacia, with the Monsanto name being
retained for the agricultural business (just as Adams is the name of Pfizer's
confectionery business). In October 2000, Pharmacia sold a 15 percent interest
in Monsanto through an initial public offering. In November 2001, Pharmacia
announced that it would spin-off its remaining 85 percent interest in Monsanto
as a special dividend to Pharmacia shareholders in order to "fully unlock the
value of our respective pharmaceutical and agricultural businesses." That
spin-off is now complete.
In a press release issued this morning, Hassan said, "Since our merger with the
original Monsanto in March 2000, we have seen its agricultural business evolve
into a strong, stand-alone company. The new Monsanto continues to build on its
traditional business base while further developing the promise and value of
agricultural biotechnology. The result of this spin-off will be a new Monsanto
that can focus and build on its special strengths."
For Pfizer, the completion of the spin-off marks an important step toward the
goal of completing the acquisition of Pharmacia by the end of the year. Other
conditions that must be met before the Pharmacia acquisition can be completed
include:
o Receiving approvals from the antitrust regulators in the United
States and European Union.
o Holding special meetings of the shareholders of both companies. Pfizer
shareholders will be asked to amend the company's certificate of
incorporation and to approve the issuance of additional shares.
Pharmacia shareholders will be asked to approve the definitive agreement
for Pfizer to acquire Pharmacia. Progress is being made on this front,
too, with the filing today with the U.S. Securities and Exchange
Commission (SEC) of the "S-4" - a document that contains
information relating to the acquisition.
The Cafe will report on the completion of each of these milestones as they
occur.
TRANSITION TEAM LEADERS FROM PFIZER AND PHARMACIA GATHER FOR FIRST MEETING
August 14, 2002
The transition planning process took a major step forward yesterday as some 40
colleagues from Pfizer and Pharmacia met in New York to discuss in detail how
the next several months will unfold.
From the outset, top leaders from Pfizer and Pharmacia have said that the
transition planning process - which will take place between now and the close of
the deal - and the subsequent integration of our two companies, will be largely
driven by our businesses and divisions, rather than Corporate. Toward that end,
two transition team leaders have been named for each of our major businesses and
divisions - one from Pfizer, one from Pharmacia. These colleagues are
responsible for the day-to-day transition planning process and for ensuring that
their business/division is ready for Day One. They met as a group for the first
time yesterday at the Millennium Broadway Hotel in New York.
Pfizer's Chief Financial Officer David Shedlarz, who is leading the transition
process for Pfizer, opened the meeting by thanking the transition team leaders
for their participation and saying that he was "very favorably impressed with
how well the two companies were working together" since before the deal was even
announced.
"You have an awesome responsibility," Shedlarz told the transition team leaders.
"You are on the front lines of bringing together two large, complex, and
fast-growing companies."
Shedlarz shared a number of guiding principles for the transition: moving with
clarity and speed; adhering to the values and behaviors of both companies,
especially Respect for People; and ensuring alignment across both organizations,
and within each individual company.
Shedlarz expressed his concern that most colleagues currently view the
acquisition as being primarily driven by cost cutting opportunities. While the
deal will, indeed, yield significant synergies, Shedlarz emphasized a host of
other reasons why this is the right move for Pfizer:
o An unequaled pharmaceutical product portfolio
o A broader and deeper R&D pipeline
o Stronger animal health and consumer healthcare businesses
o Greater, more balanced geographic presence
o Enhanced scale, with less reliance on any one product
o Greater operating flexibility and ability to manage risk
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Chris Coughlin, Pharmacia's CFO and the leader of the transition process for
Pharmacia, said that both companies have a wealth of experience with mergers and
acquisitions. Still, he cautioned, "we can't underestimate the size and
complexity of the task at hand."
Coughlin reminded the attendees to pay particularly close attention to how the
transition planning process is progressing in markets outside the United States,
which often get overlooked because the U.S. market is so large for both
companies.
Coughlin said that Pharmacia is "absolutely committed to ensuring the smoothest
and best transition possible." He stated clearly that all major decisions during
the transition planning process and beyond will ultimately be made by the Pfizer
Leadership Team, with input from Pharmacia. He added that Pfizer systems will be
used in the combined company, unless there is a clear and compelling reason to
do otherwise.
Like Shedlarz, Coughlin noted that the relationships between Pfizer and
Pharmacia colleagues have been excellent thus far, even through some "difficult
and intense times." Coughlin also echoed Shedlarz's view that the transition
team leaders are shouldering a very significant responsibility. "You're going to
have access to sensitive information that no one else knows," he said. "And
you're going to have to keep it that way until final decisions have been made
and communicated."
Coughlin emphasized that, while the overall goal is to complete the acquisition
as soon as possible, "different transition teams will move at different speeds."
In general, though, he said it is "okay to go a little too fast."
Lessons Learned, Cultures Shared
Joe Bonito, vice president, Worldwide Organizational Effectiveness, PPG, and a
member of the Program Office that has been established as a central resource for
the transition teams to call upon, shared lessons learned from the
Pfizer/Warner-Lambert combination, completed just over two years ago. These
include the need to focus on speed, to communicate rapidly, to drive decisions
through the line, and to ensure consistency between what Pfizer SAYS it is going
to do and what it actually DOES. Many Pharmacia participants shared lessons
learned from their previous mergers and acquisitions experiences. Shedlarz made
it clear that Pfizer would take all of these lessons learned into account during
this current process and that Pfizer would place a great premium on candor in
all of its communications.
Bonito also noted the many similarities between the two companies' cultures. For
example, Pfizer's eight core values (Performance, Customer Focus, Integrity,
Teamwork, Respect for People, Community, Leadership, and Innovation) are similar
in spirit to Pharmacia's "4 C's" (Commitment, Competence, Consistency, and
Compassion). Likewise, Pfizer's leader behaviors - such as "encouraging open
discussion and debate" and "developing people" - match up quite well with many
of Pharmacia's best-managed behaviors, including "shared accountability and
transparency," "ongoing listening and learning," and "coaching and developing
other colleagues."
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In addition to a strong cultural fit, the two companies also share nearly
identical corporate governance structures, which should prove quite helpful as
the transition planning process moves forward. Both companies, for example, have
top-level leadership teams consisting of a handful of senior executives - the
Pfizer Leadership Team and the Pharmacia Management Committee - and both have
management councils one level below these teams that include about 20 additional
leaders - the Pfizer Management Council and the Pharmacia Operations Committee.
Here are some other topics that were discussed at the meeting:
Day One
Shedlarz told the group that the acquisition was likely to close sometime
between November 15 and the end of 2002. He listed several expectations for Day
One:
o That one face will be presented to our customers, patients, business
partners, and colleagues, with no disruptions.
o That all colleagues in both companies will know their role and to whom
they report, even if that reporting relationship may ultimately change.
o That integration plans are in place to guide activities going forward.
Cost Synergies
Pfizer has committed to investors to delivering $2.5 billion in
acquisition-related cost savings through 2005. Meeting this target is extremely
important at a time when investors are severely punishing the stocks of
companies that miss their financial commitments. Shedlarz said that Pfizer
envisions exceeding the $2.5 billion synergy target, noting that any savings
above and beyond that number would be re-invested into areas of the business
that promise to yield the highest payoff. "We see many opportunities for growth
resulting from this combination," he said. "Lowering our cost structure will
give us the additional investment capital needed to aggressively pursue these
opportunities."
Consultants
Based on its Warner-Lambert experience, Pfizer is trying to minimize the amount
of work done by consultants on the Pharmacia deal, as well as the number of
different consulting firms involved. The Boston Consulting Group has already
been retained by PPG, PGRD, and Pfizer Global Manufacturing, as well as by the
Program Office, which should help to ensure consistency and enhance speed.
Communications
One theme that emerged throughout the meeting was the need for consistent,
global, and timely communications, both internally and externally. Colleagues
will continue to receive a steady stream of information about the transaction
through existing communication vehicles such as the Pfizer World Cafe and
Pharmacia Today, as well as from managers, who will be armed with communications
tool kits.
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A town hall meeting is scheduled for September 6 at Pharmacia headquarters in
Peapack, New Jersey. The meeting is expected to feature Pfizer CEO Hank
McKinnell, Shedlarz, PPG President Karen Katen, and Peter Corr, who heads PGRD.
The meeting will be made available live to as many Pharmacia colleagues as
possible using audio and videoconferencing capabilities. A similar meeting is
being planned for Pfizer colleagues, though no date has been finalized yet.
Monitoring "organizational health" - colleagues' attitudes, opinions, and
concerns resulting from the transition planning process - is also a top
priority. It was agreed that focus groups, spot polls, and more comprehensive
surveys would be conducted on a regular and ongoing basis at both companies and
in the combined company after Day One.
Talent Planning
Don Nelson, vice president, Human Resources, PPG, and a Program Office member,
described a two-track talent planning process. The first track involves
identifying those Pharmacia colleagues who are absolutely essential to Pfizer's
ability to operate its business as of Day One - for example, colleagues who work
in a business or therapeutic area that Pfizer does not currently participate in.
The second track involves identifying key talent from Pharmacia that Pfizer is
interested in retaining regardless of specific business needs. These colleagues
will be identified through discussions between business/division heads from both
companies and by using data generated by Pharmacia's Talent Planning &
Performance Management Process. Nelson said that Pfizer was committed to
finding jobs for as many Pharmacia colleagues as possible. In fact, Pfizer has
instituted a hiring freeze, except for those positions deemed absolutely
critical to meeting the company's 2002 business objectives. This will give
Pharmacia colleagues a chance to apply for positions within Pfizer, though
Nelson emphasized that this posting process would likely not begin until very
close to Day One.
Next Steps
The transition team leaders plan to meet again early in the week of September 9
to finalize a number of deliverables they are responsible for providing to the
Pfizer Management Council, which is meeting on September 12-13. The Cafe will
report on these meetings and all significant acquisition-related news that
occurs between now and then.
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* * * *
SAFE HARBOR STATEMENT
THIS RELEASE CONTAINS CERTAIN "FORWARD-LOOKING" STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE
STATEMENTS ARE BASED ON MANAGEMENT'S CURRENT EXPECTATION AND ARE NATURALLY
SUBJECT TO UNCERTAINTY AND CHANGES IN CIRCUMSTANCES. ACTUAL RESULTS MAY VARY
MATERIALLY FROM THE EXPECTATIONS CONTAINED HEREIN. THE FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN INCLUDE STATEMENTS ABOUT FUTURE FINANCIAL OPERATING
RESULTS AND BENEFITS OF THE PENDING MERGER BETWEEN PFIZER INC. AND PHARMACIA
CORP. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
DESCRIBED HEREIN INCLUDE: THE INABILITY TO OBTAIN SHAREHOLDER OR REGULATORY
APPROVALS; ACTIONS OF THE U.S., FOREIGN AND LOCAL GOVERNMENTS; THE INABILITY TO
SUCCESSFULLY INTEGRATE THE BUSINESSES OF PFIZER INC. AND PHARMACIA CORP.; COSTS
RELATED TO THE MERGER; THE INABILITY TO ACHIEVE COST-CUTTING SYNERGIES RESULTING
FROM THE MERGER; CHANGING CONSUMER OR MARKETPLACE TRENDS: AND THE GENERAL
ECONOMIC ENVIRONMENT. NEITHER PFIZER INC. NOR PHARMACIA CORP. IS UNDER ANY
OBLIGATION TO (AND EXPRESSLY DISCLAIMS ANY SUCH OBLIGATION TO) UPDATE OR ALTER
ITS FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS, OR OTHERWISE.
WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS THAT PFIZER INC. AND PHARMACIA CORP. HAVE FILED AND WILL FILE
WITH THE SECURITIES AND EXCHANGE COMMISSION BECAUSE THEY CONTAIN IMPORTANT
INFORMATION.
Pfizer and Pharmacia will file a proxy statement/prospectus and other relevant
documents concerning the proposed merger transaction with the SEC. INVESTORS ARE
URGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. You will be able to obtain the documents free of charge at the
website maintained by the SEC at www.sec.gov. In addition, you may obtain
documents filed with the SEC by Pfizer free of charge by requesting them in
writing from Pfizer Inc., 235 East 42nd Street, New York, New York 10017,
Attention: Investor Relations, telephone: (212) 573-2668. You may obtain
documents filed with the SEC by Pharmacia free of charge by requesting them in
writing from Pharmacia Investor Relations, Route 206 North, Peapack, New Jersey
07977, or by telephone at (908) 901-8000.
Pfizer and Pharmacia, and their respective directors and executive officers and
other members of their management and employees, may be deemed to be
participants in the solicitation of proxies from the stockholders of Pfizer and
Pharmacia in connection with the merger. Information about the directors and
executive officers of Pfizer and their ownership of Pfizer shares is set forth
in the proxy statement for Pfizer's 2002 annual meeting of shareholders.
Information about the directors and executive officers of Pharmacia and their
ownership of Pharmacia stock is set forth in the proxy statement for Pharmacia's
2002 annual meeting of stockholders. Investors may obtain additional information
regarding the interests of such participants by reading the proxy
statement/prospectus when its becomes available.
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