Pfizer 2009 Annual Report Download - page 58

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
B. Fair Value of Consideration Transferred
The table below details the consideration transferred to acquire Wyeth:
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
CONVERSION
CALCULATION
FAIR
VALUE
FORM OF
CONSIDERATION
Wyeth common stock outstanding as of the acquisition date 1,339.6
Multiplied by Pfizer’s stock price as of the acquisition date multiplied by the
exchange ratio of 0.985 ($17.66(a) x 0.985) $ 17.40 $23,303
Pfizer common
stock(a),(b)
Wyeth common stock outstanding as of the acquisition date 1,339.6
Multiplied by cash consideration per common share outstanding $ 33.00 44,208 Cash
Wyeth stock options canceled for a cash payment(c) 405 Cash
Wyeth restricted stock/restricted stock units and other equity-based awards
canceled for a cash payment 320 Cash
Total fair value of consideration transferred $68,236
(a) The fair value of Pfizer’s common stock used in the conversion calculation represents the closing market price of Pfizer’s common stock on the
acquisition date.
(b) Approximately 1.3 billion shares of Pfizer common stock, previously held as Pfizer treasury stock, were issued to former Wyeth shareholders. The
excess of the average cost of Pfizer treasury stock issued over the fair value of the stock portion of the consideration transferred to acquire Wyeth
was recorded as a reduction to Retained earnings.
(c) Each Wyeth stock option, whether or not vested and exercisable on the acquisition date, was canceled for a cash payment equal to the excess of
the per share value of the merger consideration (calculated on the basis of the volume-weighted average of the per share price of Pfizer common
stock on the New York Stock Exchange Transaction Reporting System for the five consecutive trading days ending two days prior to the acquisition
date) over the per share exercise price of the Wyeth stock option.
Certain amounts may reflect rounding adjustments.
C. Recording of Assets Acquired and Liabilities Assumed
The transaction has been accounted for using the acquisition method of accounting which requires, among other things, that most
assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the fair value of acquired
IPR&D be recorded on the balance sheet. The following table summarizes the provisional amounts recognized for assets acquired
and liabilities assumed as of the acquisition date. Certain estimated values are not yet finalized (see below) and are subject to
change, which could be significant. We will finalize the amounts recognized as we obtain the information necessary to complete the
analyses. We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date.
The following table summarizes the provisional recording of assets acquired and liabilities assumed as of the acquisition date:
(MILLIONS OF DOLLARS)
AMOUNTS
RECOGNIZED AS OF
ACQUISITION DATE
Working capital, excluding inventories(a) $ 16,342
Inventories 8,388
Property, plant and equipment 10,054
Identifiable intangible assets, excluding in-process research and development 37,595
In-process research and development 14,918
Other noncurrent assets 2,394
Long-term debt (11,187)
Benefit obligations (3,211)
Net tax accounts(b) (24,773)
Other noncurrent liabilities (1,908)
Total identifiable net assets 48,612
Goodwill 19,954
Net assets acquired 68,566
Less: Amounts attributable to noncontrolling interests (330)
Total consideration transferred $ 68,236
(a) Includes cash and cash equivalents, short-term investments, accounts receivable, other current assets, assets held for sale, accounts payable and
other current liabilities.
(b) As of the acquisition date, included in Current deferred tax assets and other current assets ($1.2 billion), Noncurrent deferred tax assets and other
noncurrent assets ($2.7 billion), Income taxes payable ($0.6 billion), Current deferred tax liabilities and other current liabilities ($11.1 billion),
Noncurrent deferred tax liabilities ($14.9 billion) and Other taxes payable ($2.1 billion, including accrued interest of $300 million).
As of the acquisition date, the fair value of accounts receivable approximated book value acquired. The gross contractual amount
receivable was $4.2 billion, of which $140 million was not expected to be collected.
56 2009 Financial Report