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US parent to retain
40% stake in Pfizer-Parke Davis combine
Anju Ghangurde
Mumbai, May 17: AMERICAN multinational Pfizer Inc will retain
a 40 per cent stake in the combined entity to be formed with the
proposed merger of Pfizer Ltd and Parke-Davis India. There are are
no plans to either buyback shares, or, hike the parent company’s
stake beyond 40 per cent, according to Pfizer Ltd managing director
Hocine Sidi Said.
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New horizons
Pfizer will explore the opportunity of introducing a range of
products from its consumer healthcare division and the Adams
division. Key international brands under these units include
Barbasol Shaving Gel, the Schick range of products. “It’s an
opportunity that we will explore. Parke-Davis has a consumer
healthcare division and they will look into these opportunities.
As consumers in India become more attracted to international
brands, that’s something that we will be looking at,” Mr Said
said. |
In an interview with The Financial Express, Mr Said
said: “That’s (a buyback) not, at all, on the agenda. The parent
company’s equity in the combined business will remain at 40 per
cent.” The legal merger is expected to be completed by 2002, while
the operational integration will be through by the end of 2001.
Elaborating on the issue, he said, “Buying back equity does not
serve any strategic purpose as we already have management control.
Besides, we are recognised globally as a shrewd finance company.
Under a buyback, we would have to ask ourselves what’s the return
on this investment. Pfizer has other priorities”. Mr Said’s statement
also implies that Pfizer Inc’s 100 per cent subsidiary will not
be part of what is now clearly a “two-way” merger.
Both Pfizer Ltd and Parke Davis India are 40 per cent affiliates
of the US parent, while Warner Lambert India Pvt Ltd, a 100 per
cent arm, is essentially involved in the confectionary business.
On whether, Pfizer needs to re-approach the government with its
toll-manufacturing proposal for its 100 per cent subsidiary, Mr
Said said: “It’s not clear. We believe, broadly, that the recent
announcement will come with less strings attached and create a more
favourable environment.”
The government has recently permitted 100 per cent direct foreign
direct investment into a host of sectors, including pharmaceuticals.
“The 100 per cent arm will be engaged in clinical research, explore
export opportunities and use this entity as a sourcing base, and
that intent has not changed,” he added. He also dismissed any concerns
on the 100 per cent arm being used as the preferred launch vehicle
for new products.
On product rationalisation plans, he said, under a consolidation,
shareholders expect greater value to emerge. “We do that, by looking
in a stringent manner, at our product portfolio, by putting into
place a reality check,” he added. Key criteria to arrive at a conclusion
include the profitability of the segment and a softer reality check
— whether it represents a strategic fit vis-a-vis other products.
Mr Said said that Pfizer continues to see lot of value/opportunities
to augment the value of popular brand, Protinex, through line extensions.
“We are not willing to sell the brand. We will be open to strategic
alliances that augment the brand equity of the product,” he added.
“Once we have completed the product rationalisation effort, we will
decide what to do with the remaining products. But we are not necessarily
saying that we will sell, “ he added.
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