Pak court objects to Pfizer, Parke Davis deal

Even as the allegations made by a former employee against the sale of a manufacturing facility in the Indian city of Hyderabad by Pfizer and the alleged monetary loss to its shareholders remain unproven, a court in Pakistan has objected to the merger between Pfizer's Pakistan subsidiary Pfizer Laboratories Ltd and Parke Davis on the grounds that the valuation of Parke Davis by PLL was not fair to the minority shareholders of PLL.

Interestingly, the allegations against Indian arm of the world's largest pharma maker also relates to its acquisition of the Indian subsidiary of Parke Davis by Pfizer in 2000.

The Pakistan court had, on May 21, upheld the minority shareholders' view that the valuation was not carried out in accordance with an earlier court directive in this regard. The court had, in 2002, denied the merger as the valuation was found to be against minority shareholders' interest. It had asked Pfizer to go ahead with the merger based on a fresh valuation and provided the terms of reference.

Based on the new valuation, Pfizer made an offer to the minority shareholders in August 2003. However, the minority shareholders again objected to this as they felt the fresh valuation was not accordance with the court's directive -- a view upheld by the court now.

Pfizer's attempts to merge the assets of Parke Davis world over began after the company acquired Warner Lambert, the holding company for Parke Davis, seven years ago. The months that followed the merger saw Pfizer merging Parke Davis operations and assets with its own on a global basis. In India, Ashok S Idnani, a former Pfizer executive, had alleged that the sale of Pfizer's Hyderabad facility happened at less than 10 per cent of the market value -- the details of which were posted on an internet blog.

Responding to an earlier query from Business Standard, Pfizer India spokesperson had termed blog sites as "open and unfiltered forums for the exchange of all kinds of information that may or may not have any validity". The company also clarified that "to date investigations completed in response to Idnani's claims have found them to be baseless".

"Pfizer takes such claims seriously and has by Idnani's own admission dedicated significant amounts of time and resources to evaluate them thoroughly," the company official had stated.

Meanwhile, Idani maintains that the undervaluation of the Hyderabad plant had resulted in loss to Pfizer's Indian shareholders.

Pfizer Inc is the world's largest pharmaceutical company with revenues worth $ 46 billion from global operations.